Lextar to merge with Wellypower Siu Han, Taipei; Jackie Chang, DIGITIMES [Friday 14 September 2012]
Taiwan-based LED maker Lextar, a subsidiary of AU Optronics (AUO), on September 13, 2012 announced plans to merge with Wellypower, a CCFL maker affiliated with AUO. Lextar will be the surviving company, according to the firm.
Lextar indicated the merger will be completed before the Lunar New Year in early 2013. In addition, the new Lextar will focus on LED lighting OEM business and will not develop own-brand products.
According to Lextar CFO and spokesperson, BY Chang, Lextar and Wellypower have been operating in different markets. Lextar has been a provider of backlight units (BLUs) for monitors and TVs while Wellypower mainly provides BLUs for AUO's notebook panels. In addition, Lextar has been developing OEM LED lighting products for international firms while Wellypower has been developing own-brand products in Taiwan.
Lextar's production ranges from upstream epitaxial crystal to downstream LED packaging. Wellypower, on the other hand, lacks upstream production. Currently, Lextar has a monthly LED packaging capacity of 800 million units, mainly for plastic leaded chip carrier (PLCC) products. Wellypower's monthly packaging capacity is close to 200 million units. Hence, after the merger, the new company will have a monthly packaging capacity of one billion units.
Despite the fact that Wellypower has own-brand LED lighting products, revenues from those products have accounted for just 8-10% of monthly revenues. Therefore, according to Lextar, the new company will not develop own-brand products.
Taiwan-based lighting firm, China Electric, currently has an about 21% stake in Wellypower. After the merger, China Electric will only hold around 3-4% of shares and will become a strategic investment partner of the new company.
Chang added that the merger is good for market development. Currently, order visibility is around 1-1.5 months. Chang noted that Lextar's August consolidated revenues were NT$960 million (US$32 million) and Wellypower's August revenues were NT$809 million. Deducting overlapping businesses, the output value of the merged company will be close to industry leaders such as Epistar and Everlight, said Chang.
The merger will be conducted through a share swap. The share swap ratio has been set provisionally at one Lextar share for two Wellypower shares.
