雪軒齋隨想

Taiwan LCD firm acquires local rival

TAIPEI AU Optronics, the world's third-biggest maker of liquid-crystal displays, will buy local rival Quanta Display for $2.2 billion in stock, seeking to match the scale of South Korean competitors. AU Optronics will issue one stock for every 3.5 shares of Quanta Display, AU said Friday in a statement. At Friday's closing share prices, the acquisition would be worth about 71.7 billion Taiwan dollars, or $2.2 billion, a premium of 15 percent. LCD companies are seeking greater efficiency to profit from surging flat- panel television demand after screen prices tumbled 17 percent in the past year. The combined company would boast 18 percent of industry capacity, compared with 19 percent each for Samsung Electronics and LG.Philips LCD, based on figures from DisplaySearch, a U.S. research company.

"The merger will help lower costs by expanding production capacity," said David Hsieh, a Taipei-based vice president of DisplaySearch. "The combination will narrow the gap with Korean companies." The Au Optronics transaction is the biggest acquisition in Taiwan since Fubon Financial Holding, Taiwan's third- largest financial service company, bought Taipei Bank for 80.3 billion dollars in August 2002, according to Bloomberg data. . "This merger will help consolidate and restore order to the LCD industry, and make better use of financial resources," the chairman of AU Optronics, K.Y. Lee, said at a news conference in Taipei. "A merger is not a mathematical question, it's a chemical issue. The real task comes after the two are combined." Industry earnings are rebounding as consumers spurn bulky cathode-ray TVs for sleeker flat-screen models. LG.Philips, a venture between LG Electronics of South Korea and Royal Philips Electronics of the Netherlands, is set to report a fourth consecutive quarter of profit Monday, according to analysts. Manufacturers are betting on further gains in demand because of falling prices and soccer's World Cup this summer. Panel makers are poised to raise spending on factories 13 percent to $11.6 billion this year, according to DisplaySearch. "Taiwan's LCD industry needs consolidation to become more efficient and competitive," said Tim Li, the chief financial officer at Quanta Computer, the world's largest notebook computer maker and parent of Quanta Display. After the transaction, Quanta will hold about 6 percent of AU Optronics, making it the second-biggest shareholder after Benq, which holds 9 percent. Benq is Taiwan's biggest mobile phone maker. K.Y. Lee, Benq's chief executive, will remain chairman of AU Optronics after the acquisition, the statement said. The company will create a new position of vice chairman for Quanta Display's vice chairman, Liang Tsu-chen, it said. "There will not be any job cuts after the transaction," Liang said. TAIPEI AU Optronics, the world's third-biggest maker of liquid-crystal displays, will buy local rival Quanta Display for $2.2 billion in stock, seeking to match the scale of South Korean competitors. AU Optronics will issue one stock for every 3.5 shares of Quanta Display, AU said Friday in a statement. At Friday's closing share prices, the acquisition would be worth about 71.7 billion Taiwan dollars, or $2.2 billion, a premium of 15 percent. LCD companies are seeking greater efficiency to profit from surging flat- panel television demand after screen prices tumbled 17 percent in the past year. The combined company would boast 18 percent of industry capacity, compared with 19 percent each for Samsung Electronics and LG.Philips LCD, based on figures from DisplaySearch, a U.S. research company. "The merger will help lower costs by expanding production capacity," said David Hsieh, a Taipei-based vice president of DisplaySearch. "The combination will narrow the gap with Korean companies." The Au Optronics transaction is the biggest acquisition in Taiwan since Fubon Financial Holding, Taiwan's third- largest financial service company, bought Taipei Bank for 80.3 billion dollars in August 2002, according to Bloomberg data.

Posted by CeShine on Monday, April 10, 2006 at 10:52 PM | Permalink