Shares of Merry Electronics Co (美律) yesterday surged by the 10 percent daily limit after the company’s board approved the sale of a 51 percent stake in its manufacturing plant in Suzhou, China, to China’s Luxshare Precision Industry Co (立訊) for 530 million yuan (US$79.95 million).
Shares closed at NT$116.5, the highest level since Dec. 5, 2014, reflecting investors’ optimism in the collaboration between Merry and Luxshare.
The audio electronics maker’s sale of a majority stake in its Chinese subsidiary came after the Investment Commission on June 30 blocked Merry from selling a 25.4 percent stake of itself to Luxshare, citing concerns over industry development.
The board on Tuesday approved a 530 million yuan capital injection plan for its Suzhou subsidiary, with Luxshare’s subsidiary, Kunshan Liantao Electronics Corp (昆山聯濤電子), injecting the funds in exchange for a 51 percent stake. Given that the capital injection is for Merry’s Chinese subsidiary, it does not need to pass a commission review.
The 530 million yuan from Luxshare will boost the paid-in capital of Merry’s Suzhou subsidiary from US$45 million to US$91.83 million, Merry said in a filing with the Taiwan Stock Exchange on Tuesday.
The company plans to use the new funds to add 18 industrial automated production lines, tripling its capacity at the Suzhou plant, and expects the deal to benefit the two firms’ reach in the audio electronics market, the filing said.
Merry reported net income of NT$357.77 million (US$11.46 million) for the first half of this year, compared with NT$93.35 a year earlier, thanks to a larger sales scale, better non-operating gains and a lower-than-expected tax rate. Earnings per share rose from NT$0.96 to NT$1.96 over the period.
Consolidated sales rose 19.3 percent year-on-year to NT$7.44 billion in the first seven months, company data showed.
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