MediaTek Inc (聯發科), the nation’s biggest handset chip designer, yesterday said it does not plan to list a Taiwanese Internet of Things (IoT) chip subsidiary on the Chinese stock market to pursue higher price-to-earnings multiples, dismissing media speculation.
The latest media report, amid a slew of speculation about the company’s restructuring efforts, said that MediaTek plans to spin off its IoT division, which would then be combined with MediaTek’s power amplifier arm Airoha Technology Corp (絡達), the Chinese-language Economic Daily News said.
The entity would register as a new company in China and seek an initial public offering on the Chinese stock market, given higher price-to-earnings multiples there, the report said on Sunday.
“The report is not true,” MediaTek spokesman David Ku (顧大為) said in a company statement filed with the Taiwan Stock Exchange yesterday.
Airoha, which also designs Bluetooth chips for IoT devices, is to become a fully owned subsidiary of MediaTek on Saturday, as the later is to boost its shareholding of the firm from 25 percent to 100 percent in transactions totaling about NT$5 billion (US$166 million).
Airoha suspended its trading on the Emerging Stock Market on April 25 and is to become private after the merger.
The two-stage acquisition was made through its investment arm, Hsu-Si Investment Corp (旭思投資), according to MediaTek’s filings with the Taiwan Stock Exchange in February and March.
The acquisition is to “facilitate MediaTek’s IoT business expansion and enable the group to provide one-stop shopping services for consumer electronics,” MediaTek said in a statement submitted to the Taiwan Stock Exchange on March 28.
The merger is also to help accelerate the group’s expansion in the IoT business due to larger economies of scale, and better allocation of its research and development resources, the statement said.
Airoha saw net profits almost halve to NT$269 million last year, compared with NT$506 million in 2015, as its gross margin fell to 24 percent from 30 percent, the company’s annual report said.
That translated into earnings per share of NT$4.48 last year, down from NT$8.43 a year ago.
Revenue inched up 0.6 percent to NT$4.67 billion last year, from NT$4.64 billion in 2015.
MediaTek shares edged 0.8 percent lower to NT$248.5 yesterday, slightly better than the TAIEX, which lost 0.88 percent.
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