Taipei, Nov. 13, 2012 (CENS)--San’an Optoelectronics, mainland China’s largest LED (light emitting diode) epitaxy manufacturer, announced yesterday (Nov. 12) buying into Formosa Epitaxy Inc., the second largest LED epitaxy manufacturer in Taiwan, by spending NT$2.352 billion at the temporary price of NT$19.6 per share to own 19.9% stake in the latter. As a result, San’an will become Formosa Epitaxy’s largest institutional shareholder and both parties will join forces to become a major player in the global LED market.
If approved, the case will be the largest investment made by mainland Chinese enterprises in Taiwan ever. Up to now, the amount of mainland Chinese investments in Taiwan has been quite limited, totaling only US$315 million since the government opened up such investments three years ago. Previously, mainland Chinese enterprises focused on the service sector. This is the first time for a renowned mainland Chinese manufacturer to invest in Taiwan.
Although this is the first case for a Chinese LED enterprise buying into a Taiwanese counterpart, institutional investors remarked that the investment will only affect the share prices of individual stocks, rather than the overall share prices of LED enterprises, as the LED industry has been mired in cutthroat competition, following the step of the solar-energy industry.
Still, Taiwanese LED firms welcomed the cooperative project, since it can encourage other LED enterprises across the Taiwan Strait to integrate their resources and avoid acute competition, leading to the establishment of industrial order.
The board of directors of Formosa Epitaxy approved the investment project yesterday, which will be carried out via private share placement. If the project is materialized, San’an will replace Mitsui to become Formosa Epitaxy’s largest institutional shareholder.
Share price of Formosa Epitaxy jumped NT$1.35, at the daily limit of 7%, closing at NT$20.95, 7% higher than the purchasing price offered by San’an. The real purchasing price will be determined according the market price following the approval of the project by the regulator.
Formosa Epitaxy and San’an is scheduled to sign the investment agreement today. Lin Zhiqiang, chairman of San’an, who arrived in Taiwan for the occasion yesterday, remarked that following the alliance with Formosa Epitaxy, San’an will step up its effort to penetrate the international market.
(by Philip Liu)
