Taiwan UMC merged PCB co to list in New York
TAIPEI, May 3 (Reuters) - United Microelectronics Corp (UMC)
<2303.TW>, the world's second largest microchip foundry, said on Thursday it plans to list its newly merged printed circuit board company in New York.
However, UMC said in a statement, the listing plan had no timetable.
Earlier on Thursday, UMC said its PCB unit World Wiser Electronics <5363.TWO> would merge with three other PCB makers to become Taiwan's largest PCB maker.
On Thursday, UMC shares rose T$1 or 1.89 percent to T$54. World Wiser shares gained T$1 or 2.08 percent to T$49. UMC holds a 40 percent stake in World Wiser.
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Thursday May 3, 8:30 PM
Taiwan circuit board makers merge in sector shakeout
By Baker Li
TAIPEI (Reuters) - UMC, the world's second largest microchip foundry, said on Thursday its printed circuit board unit World Wiser Electronics would merge with three domestic rivals, in a move which reflects increasing pressure to consolidate to survive.
Under the deal, World Wiser <2303> links up with Unicap Electronics Industrial Corp. <5307>, and two unlisted companies Bestmult Industry Co. and UniMicron Technology Corp.
The higher costs of developing more sophisticated PCBs to be compatible with new generation microchips are pushing manufacturers to merge to lower per unit costs, analysts say.
"The merger makes sense for World Wiser as the PCB industry is ripe for consolidation," said Mark Baughan, a technology analyst with Deutsche Bank based in Hong Kong.
Unicap and World Wiser are listed on Taiwan's over-the-counter market.
In a hastily held press conference, UMC said World Wiser, 40 percent owned by UMC, will be the surviving company and would become the largest PCB maker in Taiwan after the merger. The merged company will be renamed UniMicron Technology Corp.
The merger will be completed via a share swap. One Unicap share will be exchanged for 0.76 World Wiser, one Bestmult share will be exchanged for 0.5 World Wiser shares and one UniMicron share will be exchanged for 0.9 World Wiser shares.
Robert Tsao, the chairman of UMC Group and the head the new firm, said his company would issue an additional 600 million shares to fund the merger, expected to completed by October 31.
UMC added that it plans to list the new company in New York, but gave no timetable.
POSITIVE SIGN IN LONG TERM
UMC's Tsao said consolidation among Taiwan's 140 strong PCB firms was the right move. "We are pushing the merger not only for the sake of scale, but also to seek better performance," Tsao told reporters.
The merged company is expected to garner sales of more than US$2 billion in 2005, becoming one of the world's top three PCB makers. Sales of the four PCB companies totalled T$20 billion (US$606 million) in 2000.
The tie-up is the latest among a series of mergers in Taiwan's technology industry.
In March, the two largest technology groups, Acer and UMC, said they would merge subsidiaries in a $1 billion deal, creating the world's second largest maker of flat computer screens. The boards of Acer Display and the UMC group's Unipac Optoelectronics had approved a plan to merge the companies through a share swap.
Taiwan's Teco Electric <1504> also said in March it was taking over Sampo Corp <1604>, in a T$16.48 billion share deal that would create a firm claiming the biggest share of the country's market for appliances ranging from televisions to dryers.
The merger is a positive sign for the domestic PCB industry, analysts said.
"In the long term, the merger will give the new company advantages and reduce its operation costs," said Richard Tsai, assistant manager at Capital Securities.
Investors are expected to cheer the merger news and chase these stocks on Friday, Tsai said.
"Over the short term, however, we don't see much improvement in the global PC demand, which will also hurt demand for PCBs," Tsai said. "The worst for the industry will likely come in May or June," he added.
Last year, price competition intensified following industry-wide expansion projects and the PC slowdown is piling more pressure on PCB makers, analysts said.
A PCB is a flat plastic or fiberglass board on which electrically conductive circuits have been etched or laminated.
On Thursday, shares of World Wiser rose T$1 or two percent to close at T$49 with Unicap rising the daily seven percent limit to T$25.60, while the TAISDAQ gained 2.67 percent. |
