Taipei, June 27 (CNA) Shares of Panram International Corp., a Taiwanese memory chip module maker, moved sharply higher Wednesday after U.S.-based memory chip vendor Kingston Technology Corp. agreed to take a 20 percent stake in the company, dealers said.
The market was betting on expectations that the tie-up with Kingston will help Panram obtain orders from the U.S. partner and further strengthen its bottom line, they said.
Shares of Panram closed up 7 percent, the maximum daily increase, at NT$17.30 (US$0.58) with 1.95 million shares changing hands, while the index of the local over-the-counter market, where the stock is traded, was up 0.40 percent at 104.14.
Panram shares attracted strong buying shortly after the market opened following the company's announcement of the stake sale a day earlier, market analysts said, adding that the partnership with Kingston is expected to boost Panram's market visibility.
Panram said in a statement that its board of directors had decided to issue 11.80 million shares in a private placement at NT$12.46 each, and Kingston agreed to acquire them all.
After the private placement, Kingston will take a 20.84 percent stake in Panram and become the largest shareholder of the Taiwanese company.
The share sale is expected to boost Panram's paid-in capital (calculated based on the nominal share price of NT$10) to NT$566 million, from the current NT$448 million, after Kingston pays for the stake by the payment deadline of July 10.
Panram said the sale was aimed at setting up a long-term strategic alliance with Kingston, which is expected to strengthen the Taiwanese company's competitiveness.
Analysts said Panram is expected to use the funds raised from the private placement as working capital to expand its production capacity to help meet demand from Kingston for contract manufacturing services.
In 2011, Panram posted net income of NT$30.04 million, or NT$0.69 per share, compared with a net loss of NT$37.16 million, or a loss per share of NT$0.88 the previous year.
In the first quarter of this year, Panram had a profit of NT$19.15 million, or NT$0.43 per share.
(By Jackson Chang and Frances Huang)