Delta Electronics Inc (台達電), the nation’s leading power and thermal solutions provider, has obtained approval from antitrust authorities to pursue a conditional voluntary tender for its Thailand-listed subsidiary.
In a regulatory filing on Wednesday, Delta said it would comply with Thai regulations to begin acquiring Delta Electronics (Thailand) PCL’s remaining 986,269,024 shares, or a 79.07 percent stake, at 71 baht (US$2.27) per share.
Delta presently holds a 20.93 percent stake in the Thai unit.
The deal, a transaction estimated to total US$2.14 billion, should increase the company’s global manufacturing reach and improve its sales support in Southeast Asia and nearby regions, Delta said.
The increased stake should also help Delta manage international trade uncertainties and gain further flexibility amid US-China trade tensions, the company said.
Most of Delta’s production facilities are in China, while its Thai subsidiary has manufacturing operations in Thailand, India and eastern Europe.
“We expect that the deal will reduce Delta’s reliance on China-based operations from 90 percent to between 80 and 85 percent,” KGI Securities Investment Advisory (凱基投顧) analysts Jennifer Liang (梁姿嫺) and Terry Lee (李承泰) said in a client note on Thursday.
Delta’s products and those of the Thai unit do not overlap, especially given their differences in research capability, location and customer base. The Thai unit is to remain listed on the Stock Exchange of Thailand.
“We expect the company to complete the deal by the end of the first quarter,” KGI analysts said. “While the deal is likely to dilute Delta’s gross margin, it could lift its 2019 profit by 0.6 percent.”
Delta reported revenue of NT$18.8 billion for last month, down 11.4 percent month-on-month and 0.8 percent year-on-year.
KGI forecast that Delta’s revenue for this year would increase 6.7 percent annually and that company profit would rise 16.7 percent from last year, with earnings per share of NT$8.12.
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