Prior Notice of Merger
June 12 2002 - 7:02AM
UK Regulatory
RNS Number:1237X
GVC Corporation
12 June 2002
June 10, 2002
Joint Press Release for Lite-On Group
Lite-On Group Companies Merge
New Entity A Multidimensional Global Company
Transaction Summary
Lite-On Technology Corp., Lite-On Electronics Inc., GVC Corp. and Silitek Corp.
have agreed to merge to form a single company (the new Lite-On). Lite-On
Technology will be the surviving entity in the 4-way merger. The Board of
Directors of each company have approved the merger today. The respective Boards
expect the transaction to be completed in November 2002, pending shareholder and
regulatory approval. The combined market capitalization of the four existing
companies, as of June 7, 2002, is NT$ 103.52 billion.
The 4-in-1 merger is the first of its kind in Taiwan's hi-tech industry,
following the passing of the new M&A Act in January 2002 in the Legislative Yuan
which encourages consolidation activities in Taiwan. Salomon Smith Barney is
acting as the Financial Advisor to Lite-On Group.
Key Highlights
• The new Lite-On is the 3rd largest locally and 8th largest globally in the
ODM and EMS industry space.
• Over 60% of combined revenues are derived from products in which the
company ranks amongst the top 3-4 producers in the world.
• With US$100 million p.a. in R&D spending, the merged company ranks amongst
the highest investors in convergence R&D in Taiwan. Its R&D capability in
the 3C segment in Taiwan is unmatched. With over 1,000 global patents, the
new company ranks amongst the largest IP owners in Taiwan's hi-tech
industry.
• The new company will strategically re-position the business as a partner
of choice to global OEMs in the computing, communication and consumer
sectors.
• Services of the new Lite-On span from a) design to manufacturing, b)
components to full system assembly and c) from home to enterprise solutions
in the 3C sectors.
• The new Lite-On has strong financial flexibility to facilitate strategic
acquisitions utilizing incremental debt capacity and large capitalisation,
and will capture significant savings of up to NT$3.0 billion over the next
12 months by co-ordinating functions such as material and other procurement,
administration and IT across companies.
Deal Rationale
The proposed merger is a proactive response from the Lite-On Group to capitalize
on new opportunities arising from the current slowdown in the technology sector.
The merger will achieve five broad objectives:
• Create broad global supplier of design and manufacturing services to
top global OEMs in the computing, communication and consumer sectors;
• Position the new Lite-On to benefit from convergence trends;
• Create strategic flexibility in financing and operations;
• Enhance profitability through cost reduction; and
• Simplify ownership and cross-shareholding structure.
1. Global supplier of design and manufacturing services
The merger is re-positioning the new Lite-On in the same league as global EMS
companies and top Taiwan ODM companies - 3rd largest among hi-tech manufacturing
companies in Taiwan, measured in terms of revenue. This responds to the
strategic challenges in the maturing hi-tech manufacturing sector, where
industry and marketshare consolidation is a reality. New Lite-On's position as a
broad and volume supplier with design capability will help it gain new
customers, penetrate existing customers and achieve revenue synergies through
potential product bundling.
After the merger, the new Lite-On will consist of core businesses from Lite-On
Technology, Silitek, Lite-On Electronics and GVC: power supply, monitor,
scanner, keyboard, and mobile handset. Many of these businesses already hold
leading positions in the global market, which form a strong base for future
expansion and value creation.
2. Positioned to benefit from convergence
The new company distinguishes itself from other hi-tech manufacturing companies
in Taiwan by its limited customer concentration and a broad customer base of top
global OEMs in the computing, communications and consumer sectors including IBM,
HP-Compaq, Dell, Sony, 3Com, Nokia, Ericsson, Motorola, Siemens and Lexmark. In
working closely with its customers, the new Lite-On combines design skills in
the 3C sector within the company - unmatched in Taiwan - and therefore, remain
positioned to benefit from convergence.
3. Strategic flexibility in financing and operation
The capability, size, reach, and financial strength of the new company creates
new financial flexibility to make acquisitions and finance future expansion. The
new Lite-On will have a combination of growth and stability with its portfolio
ranging from emerging high growth products to mature products where the Company
generates cash through a combination of high market share and low manufacturing
costs.
4. Enhance profitability through cost reduction
By coordinating selected operations of the merging entities, such as material
and other procurement, administration, and IT, the new company could capture
significant cost saving opportunities. Full savings could reach NT$3.0 billion
over the next 12 months, with approximately NT$1.50 per share cost synergy
majorly coming from procurement of direct and indirect materials.
5. Simple ownership and cross-shareholding structure
This 4-in-1 merger will eliminate complex inter-company holdings among the four
companies being merged. The new Lite-On will own 71.7% in Lite-On IT Corporation
, 23.4% in Lite-On Semiconductor Corporation, 37.50% in Lite-On Enclosure Inc.
and 18.0% in Lite-On Automotive Corporation.
Merger Details
Lite-On Technology will be the surviving entity in the 4-way merger.
Shareholders of Lite-On Electronics, Silitek and GVC will exchange 1.62, 1.09
and 2.93 shares received from Lite-On Technology. The share exchange ratio is
based on the earnings capability, net worth per share, market price and business
outlook of each company. The exchange ratio has been verified by independent
IFAs.
The merger between Lite-On Technology and Silitek, Lite-On Electronics and GVC
are being approved individually by shareholders of each of the three respective
companies. These three mergers are not contingent upon one another and will
continue even if shareholders of any company disapprove the transaction.
Management
Founder Raymond Soong will be the Chairman of the new company, with 12-year
Lite-On veteran David Lin as the company CEO. Warren Chen, Deputy CEO, will head
shared services group and corporate function group which supports various
business groups. All existing company presidents, re-designated Business Group
CEOs, and key business-unit executives from the respective four existing
companies will join the new entity and continue to manage their respective
businesses.
Danny Liao, President of Lite-On Technology will head the PC System, Display and
Networking groups; David Su, President of GVC will lead Network Access and
Mobile Phone groups; K.C. Terng, President of Lite-On Electronics will oversee
the Power Supply and Opto Semiconductor groups; and Paul Lo, President of
Silitek will supervise Image, Human Input and EMS groups. The management team
leading the new company constitutes professionals with 200 years of relevant
industry expertise.
************************************************************************
About Lite-On Technology Corp.
Lite-On Technology Corp. was established in 1989. It focuses on ODM business and
its major products include LCD and CRT monitors, computer systems and barebones,
network cards and switches.
About Lite-On Electronics Inc.
Lite-On Electronics Inc. was established in 1975. The Company has two business
units: (i) opto business unit, which focuses on development, manufacturing and
sale of LED products, and (ii) power supply business center, which develops,
manufactures, and sells power supply products. The Company's products cater to
home appliance, information technology and communication equipment segments.
Lite-On Electronics Inc.'s power supply business is ranked No. 2 in Taiwan and
No. 6 in the world, while it possesses the largest LED packaging house in
Taiwan.
About Silitek Corporation
Silitek Corporation was established in 1978 as Silitek Rubber Corporation Ltd.
with a focus on manufacturing and sale of electronic rubber components. In 1983,
the Company was renamed Silitek Corporation. Silitek has five business units
viz., Rubber Business Unit, Human Input Solution Business Unit, Image Management
Division, EMS Division and Internet Access Business Unit.
About GVC Corporation
GVC Corporation designs, manufactures, markets and sells wireless and wired
communication products, including GSM and GPRS handsets, Bluetooth devices, V.9x
/xDSL modems as well as MP3 players. GVC sells its products primarily to the
world's leading original design manufacturer ("ODM") and original equipment
manufacturer ("OEM") customers. GVC has proven successful track record in both
wired (network access) and wireless communication industries.
Please contact the following persons for further inquiries.
Lite-On Technology Corp.
Fred Lin Vice President
Tel: +886-2-2570-6699 #6620
Fax: +886-2-2570-6888
Email: Fred_R_Lin@liteontc.com
Lite-On Electronics Inc.
Ancel Lee Vice President
Tel: +886-2-2222-6181 #1506
Fax: +886-2-2221-3690
Email: ancellee@liteon.com.tw
Silitek Corp.
Yin-Yi Hsiao CFO
Tel: +886-2-2788-4766 #628
Fax: +886-2-2789-2478
Email: yy_hsiao@silitek.com
GVC Corp.
Angela Huang Vice President
Tel: +886-2-2577-4321 #270
Fax: +886-2-2579-6936
Email: angelah@liteon.com.tw
Lite-On Group
Stephen King
Tel: +886-2-2577-4321 #206
Fax: +886-2-2579-6936
Email: sking@liteon.com.tw
This information is provided by RNS
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