Teco Electric & Machinery Co (東元電機), one of Taiwan’s leading suppliers of electric motors, yesterday announced plans to acquire local transformer maker Shenchang Electric Co (伸昌電機) for not more than NT$550 million (US$17.21 million).
The deal — which also includes forming a strategic alliance with Shenchang’s Indonesian affiliate PT Sintra Sinarindo Elektrik — is expected to begin contributing revenue to Teco Electric next quarter, the company said in a statement.
The deal comes as Teco aims to pursue global transformer business, especially in North America, and grab electromechanical business opportunities in Indonesia.
Photo courtesy of Teco Electric & Machinery Co
At a media gathering last month, Teco chairman Morris Li (利明献) unveiled the company’s three-year development plan that focuses on high-potential businesses, including green energy, power conservation, carbon reduction and electrification, as the company targets becoming a comprehensive solution provider.
In yesterday’s statement, Li said that the deal would help improve the company’s electrification product portfolio and achieve its goal of becoming an “industrial electrification integrator.”
Established in 1971, Shenchang primarily produces distribution transformers and has been active in the Indonesian market since 1996, serving companies such as Taiwan Power Co (Taipower, 台電), Formosa Plastics Group (台塑集團), PT PLN (Persero) and Siemens AG, Teco said.
Under the terms of the deal, Teco plans to acquire a 57.2 percent stake in Shenchang to become a majority shareholder and help expand Shenchang’s manufacturing facilities in Taiwan, it said.
The companies are also eying the transformer markets in Taiwan and North America, and plan to broaden their product portfolio to 69 kilovolt (kV) to 161kV power transformers in the near term, Teco added.
Moreover, the companies aim to provide green solutions amid the growing trend of climate awareness, rising demand for data centers and significant infrastructure upgrades in the US, Teco said.
The initial focus would be on meeting the enormous demand for distribution transformers in North America; in Taiwan, particularly in the industrial sector; for new energy projects and data centers; and for Taipower projects that aim to enhance the state utility’s power grid and operational resilience, it said.
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