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.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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