Networking equipment maker D-Link Corp (友訊科技) on Tuesday said it plans to participate in a private placement of common shares in Cameo Communications Inc (友勁科技), aiming to bolster its partnership with the networking and communication products supplier.
D-Link plans to invest NT$800 million (US$28.19 million) to acquire 97.68 million Cameo Communications shares at NT$8.19 per share, D-Link chairman John Lee (李中旺) told a news conference at the Taiwan Stock Exchange after the firm’s board of directors approved the proposal earlier on Tuesday.
After the private placement, D-Link’s stake in Cameo Communications would increase to 39.10 percent from 17.35 percent, the company said.
Photo: Wang Yi-hung, Taipei Times
D-Link would retain one seat on Cameo Communications’ board, it said.
Taipei-based D-Link makes network switches, surveillance network cameras, firewalls, routers and smart home accessories, while Cameo Communications’ products include Ethernet cards, hubs, smart switches and routers.
The move would allow D-Link to expand its presence in the US market, Lee said.
“We continue to view the smart switch market favorably,” he said. “More importantly, Cameo Communications’ Tainan production facilities will become a strategic manufacturing base for US-bound exports,” Lee said. “There is a lot of potential for growth in the network switch market, especially smart switches.”
Smart switches, also called Web-managed switches, offer switch management features through a Web browser.
Cameo Communication manufactures half of its products in Tainan and the other half in Suchow, China.
However, production would shift toward Tainan after the firm in July 2019 gained Ministry of Economic Affairs approval to invest NT$550 million in its Tainan operations.
Lee said that the collaboration between the firms would start to bear fruit in six months to a year.
Capital Investment Management Corp (群益投顧) analyst Liu Yi-ho (劉宜和) yesterday said in a note that Cameo Communications is already one of D-Link’s main suppliers, but D-Link has placed some orders for low-priced products with Chinese manufacturers in the past few years.
However, business opportunities for non-Chinese networking and communications products have emerged in the US since the beginning of the US-China trade dispute, while another major supplier to D-Link, Alpha Networks Inc (明泰科技), was acquired by electronics conglomerate Qisda Corp (佳世達) last year, Liu said.
“We believe this private placement will further increase the partnership between D-Link and Cameo, as well as deepen their cooperation in products such as enterprise network switches and enterprise wireless routers,” he said.
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