Passive component maker Teapo Electronic Corp (智寶) yesterday said that it would merge its subsidiary Kaimei Electronic Corp (凱美) through a share-swap deal in a bid to drive growth by expanding into fast-growing 5G, automotive and Internet of Things (IoT) segments.
The merger is considered a step toward further consolidation within Yageo Corp (國巨).
Yageo, the nation’s biggest passive component supplier, owns 12.02 percent of Teapo, excluding Yageo chairman Pierre Chen’s (陳泰銘) and his family’s shareholdings.
The merger announcement came two years after Teapo and Kaimei worked together in a virtual combination.
Deepening their collaboration would help expand their product portfolios and boost pricing power in raw material sourcing, the companies said in a joint statement.
The deal would also help the new entity upgrade its technologies, the statement said
According to the deal, Teapo shareholders will receive one Kaimei share for every 1.165 Teopo shares.
Teapo, which holds about 43 percent of Kaimei, would be the surviving company, while Kaimei would be delisted from the Taipei Exchange, the companies said.
The transaction is expected to be completed on Sept. 30, they said.
“The new entity aims to become the world’s major key electronic component supplier. The deal will help fuel new growth momentum, targeting business opportunities in 5G, automotive and IoT areas,” Teapo chairman Chang Wei-tsu (張維祖) told a media briefing in Taipei.
Aluminum electrolytic capacitors, which are Teapo’s major source of revenue, is one of the main components of 5G devices, automobiles and IoT devices, Chang said.
“The company’s communications equipment clients and end product manufacturers are all eager to [benefit from] this [5G] segment,” Chang said.
The deal should also help the company weather lukewarm customer demand this year, Chang said.
The company is cautious about market demand this year, given weak order visibility, Chang added.
The two companies have complementary product lines and technologies. Teapo primarily makes aluminum electrolytic capacitors, while Kaimei makes cooling fans and LAN transformers, in addition to capacitors.
Aluminum electrolytic capacitors are to account for half of the new company’s revenue, the statement said.
Teapo and Kaimei last year reported a combined revenue of NT$4.33 billion (US$140 million).
“We believe this closer cooperation will bring in more business and save unnecessary costs,” Kaimei chairman Weng Chi-sheng (翁啟勝) told reporters.
“We might need to expand our workforce to cope with the increase in business,” Weng said.
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