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Innolux and CMO to merge; Foxconn strengthens its LCD TV hand
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Michael McManus, DIGITIMES, Taipei [Saturday 14 November 2009]
A day after dismissing reports that it was in talks with Innolux Display about a possible merger, Chi Mei Optoelectronics (CMO) announced that it will merge with Innolux to form Taiwan's largest LCD panel maker. Innolux is a subsidiary of Foxconn Electronics (Hon Hai Precision Industry).
The merger will be done through a share exchange whereby CMO will receive one Innolux share for every 2.05 shares of CMO common stock. The merger is scheduled to be completed by May 1, 2010 and the new company will keep the Innolux name.
The two companies indicated they can create synergies by integrating resources, reducing operating costs and expanding their business scale through their complementary customer bases. CMO is Taiwan's second largest LCD panel maker and and it has the fourth largest LCD panel capacity in the world. Innolux, on the other hand, excels in LCD integration and system assembly and has a superior client list, the two companies stated.
Taking a closer look at the two companies strengths reveals that the key to the deal may be LCD TV panel capacity.
Innolux does have LCD panel capacity but the company is a systems maker (after all, it is part of the Hon Hai Group) so its panel capacity is basically for in house production. Currently, about 90% of its panel sales come from the LCD monitor segment. Innolux is Taiwan's second largest LCD monitor maker, trailing only global leader TPV. In the third quarter of this year, Innolux shipped more than 10 million LCD monitors, and it will ship another 10 million units in the fourth quarter, according to Digitimes Research.
However, although Innolux has been steadily increasing its market share for LCD monitor products, the overall market is still stagnating. Digitimes Research data indicated that the global LCD monitor market shrank by a little more than 2% in 2008 and will only grow a slight 2.2% this year. Growth will not top 4% over the next four years.
Innolux has been looking to increase its presence in the LCD TV market, but with little success so far. The company will ship less than one million LCD TVs this year and it does not even rank among Taiwan's top five makers in terms of LCD TV shipments.
The fact is that Innolux is not very strong in the LCD TV market and one of the main reasons for this is that it lacks capacity. The company has reportedly made plans to increase its capacity by two-thirds in 2010 and it was even said to be planning to buy LCD production equipment from CMO earlier this year. However, purchasing CMO is another way to go, especially since it involves a share swap and no money changing hands.
CMO is considered one of the leading producers of LCD TV panels and based on the two LCD makers' combined capacity, Innolux should be able to achieve its goal of shipping 4-6 million LCD TVs in 2010. |
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发表于 2009-11-14 20:14
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