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Hon Hai Group to buy stake in Microelectronics

2012/09/22 13:58:49

Taipei, Sept 22 (CNA) Hon Hai Group, the world's largest contract electronics maker, has agreed to acquire a stake in Microelectronics Technology Inc., a Taiwan-based microwave and satellite communications product supplier, eyeing the great potential of electronics commerce and long-term evolution (LTE) technology development.

Hon Hai Precision Industry Co., the flagship of Hon Hai Group, and its affiliate CyberTAN Technology Inc. signed agreements with Microelectronics Friday to spend a total of NT$1.8 billion (US$61 million) to acquire convertible bonds issued by Microelectronics in a private placement.

After the conversion into Microelectronics' common shares, Hon Hai Precision and CyberTAN are expected to hold a 32.62 percent stake in the microwave and satellite communications product provider.

Under the acquisition agreement, the conversion price of about 200 million Microelectronics common shares has been set at NT$9 per share.

CyberTAN is expected to spend NT$1.6 billion for a 29 percent stake in Microelectronics to become the largest shareholder of Microelectronics, while Hon Hai Precision will take a 3.62 percent stake by spending NT$200 million.

Shares of Microelectronics closed up 7 percent, the maximum daily increase, at NT$11.50 with 10.97 million shares changing hands on the Taiwan Stock Exchange Friday.

Hon Hai Group Chairman Terry Gou said his group is expanding its investments in wireless and satellite communications development, hoping the acquisition deal will help the group take advantage of Microelectronics' strength in research and development in the particular area.

Gou said the investments in wireless and satellite communications development are expected to pave the way for the group to strengthen its presence in electronics commerce business.

Lee Gwong-yih, chairman of CyberTAN, said as his company and Microelectronics complement with each other in a wide range of areas such as technology, product portfolios, customer mix and marketing, the investment deal is expected to boost the strength in broadband and wireless communications businesses for both sides.

In addition, Lee said CyberTAN is aiming to use the investment to speed up development of LTE technology in the future.

In the first half of this year, Microelectronics incurred NT$528 million in net loss or NT$1.28 in loss per share on sales of NT$4.19 billion. Its gross margin for the six month period stood at 8.08 percent.

(By Tien Yu-pin and Frances Huang)