World Peace Industrial (WPI), Asia's largest distributor of semiconductor components, has signed a share-swap merger deal with Silicon Application Corporation (SAC). The new firm will be listed on the Taiwan Stock Exchange (TSE) starting September 1, 2005 if the merger is approved by the TSE.
The combined market value of the two companies was estimated to be NT$11.8 billion.
The new company, WPG Holding Company (WPG), will be Taiwan’s first-ever investment holding firm for IC distribution and have a paid-in capital of more than NT$6.7 billion. The deal is structured so that one WPI share will be exchanged for 1.18 WPG share, while SAC shares will be exchanged straight-up for new WPG shares.
By forming a holding company instead of merging all operations, the two companies will be able to share their resources while still operating independently, market sources commented.
SAC chairman Kuo-yuan Chen said consolidation among Taiwan’s IC distributors is necessary due to the growing threat from global IC distribution giants’ Arrow, and Avnet, both of whom are actively developing the Asia-Pacific market. The new company is expected to have 2,400-employees, NT$110 billion in annual revenues and NT$35 billion in assets, while operating from more than 50 marketing bases in the Asia-Pacific region.
However, even with their combined resources, WPG will be much smaller than Arrow and Avnet, whose respective market values total NT$95.8 billion and NT$71.9 billion.
Nevertheless, WPI chairman Simon Huang said his company’s clients have shown strong support for the merger, and some international brands have already offered to let the new firm handle distribution of their products for the Europe market. However, Huang said the most important job at present is to expand WPG’s market share in the Asia-Pacific region.
WPI distributes more than 60 brands, including Intel, Texas Instruments (TI), Philips Semiconductors, Hynix Semiconductor, and Vishay Intertechnology.
The share price of WPI was up NT$0.05 today, closing at NT$21.7, while SAC closed at NT$18.05, up NT$0.75.
In related news, WPI ‘s board of directors on March 15 approved a deal to acquire 70% of another IC distributor, RichPower Technology, through a share-swap program.
Coming together for World Peace; source: companies
Article translated by Rodney Chan and edited by Michael McManus
