Lextar and Wellypower Announced Their Combination Into One

Lextar Electronics Corp. and Wellypower Optronics Corp. yesterday announced their combination into one, with Lextar being the surviving company. Both companies are mostly held by LCD maker AU Optronics Corp. (AUO).

Industry executives estimate the combination will make the new body Taiwan's No.2 LED maker by revenue, after only Epistar Inc.

It is a combination based on all-paper swap, with two Wellypower shares for one Lextar common share. The transaction is estimated at NT$2.1 billion (US$70 million at US$1:NT$30). Combination baseline is set on February 1, 2013.

According to Lextar Chairman F.J. Su, the merger will efficiently integrate the two companies' resources to boost competitiveness of the new entity.

Lextar is already an integrated LED manufacturer, capable of making everything from chips and packaged LEDs to modules and luminaires. The combination will add Wellypower's monthly output of 200 million packaged LEDs to Lextar's 800 million outputs.

Industry executives analyzed that the merger will add AUO's barging chips in talks with potential investors in it. Also, the deal will deepen its partnership tie with China Electric Mfg. Co., Ltd., Taiwan's No.1 homegrown lamp maker still retaining a stake in Wellypower.

China Electric Chairperson L.J. Chou pointed out that the combination will allow her company to maximize the efficiency of its resources and reduce purchase cost to further sharpen competitive edge.

The lamp maker pointed out that the combination was unlikely until recently when Wellypower began shifting to LED making from cold cathode fluorescent lamp (CCFL) production. LED has now largely replaced CCFL as the major backlight for LCDs.

In the first half of this year, China Electric had consolidated revenue of NT$3.5 billion (US$118 million), increasing 7% year on year, and after-tax net income of NT$280 million (US$9.3 million), slipping slightly from the same half of last year. Industry executives ascribed the earnings reduction mostly to its booking loss from investment in Wellypower.