AUO acquired Guihui electronic panel investment alarm sounding

In April 7, 2006, third of the world's largest LCD panel manufacturers in Taiwan's Au Optronics Co (hereinafter referred to as AUO) with its rival Taiwan Guihui electronic Limited by Share Ltd (hereinafter referred to as QDI) board were held, the two sides formally adopted by the board of directors of the two companies merger.

This post is worth more than $2 billion 200 million acquisition will affect hundreds of yuan of LCD TV prices will cause a series of panel and related enterprise mergers and acquisitions, more deadly, as the current investment boom around like a raging fire panel, causing heavy alarm.

Merger induced Domino effect

The two companies officially announced the deal after the close of the Taiwan stock exchange in April 7th. The merger swap, the exchange ratio is 1:3.5, namely, AU Optronics will the issuance of shares to 3.5 shares, Guanghui electronic exchange AUO 1 shares, and AUO merged into corporation. The merger date is October 1, 2006.

After the completion of the acquisition, according to current projections in the global AUO supply proportion will be from the previous 13.6% has climbed to 19.4%, will be its main competitor Samsung LG-Philips, the current market share (the two are currently 21%) matched. At the same time, the two companies have the most economic benefits of the five generation line and the total capacity of the six generation line will become the world's first.

TFT-LCD panel industry is a pillar industry in Taiwan. Due to the advantages of Samsung and LG technology and market, panel industry in Taiwan in addition to CMO and AU Optronics rely on the advantage of scale profit (CMO in terms of shipments ranked third in the world, AUO by revenue ranked third), other manufacturers are in different degrees of loss.

Guanghui electronic former contributing analyst, Taiwan ICBC securities investment manager Wang Qinghong said: "Taiwan panel plant profitability, mainly by the scale, although the profitability of AUO, CMO is currently the highest in the world, but the second factory due to the small scale, high cost, facing losses across the board, AUO two times before and after in the merger, the panel industry can only hold together a chance of survival."

"In the long run, the merger is a good thing for the mainland's TV assembly plant." The general manager of Konka Group digital tablet division Liu Dan said, "before the mainland TV manufacturers are worried, if the Taiwan panel manufacturers do not good, the mainland TV manufacturers will only rely on South Korea manufacturers, it will not only make the panel price change is more intense, Japanese and Korean manufacturers to form a monopoly, more unfavorable to the mainland manufacturers. After the merger, will improve the profitability of the Taiwan panel manufacturers, making LCD panel competition more intense."

After the merger, the new friend will be the fifth and 6 generation line and overlord, with adequate capital, will accelerate the new AUO 7-8 generation panel new era investment action." SKYWORTH group China regional marketing headquarters general manager Liu Tangzhi said, "may the 32-37 inch panel prices quickly pulled down in the short term, the long term will enter the oligopolistic competition, the panel price volatility will be reduced, it is a good news for the mainland manufacturers purchase will."

"According to the new 5-6 line capacity AUO future estimates will than expected price range of about 2% lower, is $10-20, in other words, after October, each 32-37 inch LCD TV prices than expected decreased nearly one hundred yuan." Senior manager of market research company AV division Sheng zhe think.

"This merged to form the powerful role of the extrusion of the entire industry, industrial pattern of" the big hand Hengda, HENGQIANG "more obvious, further between the first and second tier manufacturers in the distance; on the other hand, the Taiwan panel industry enterprises for survival no other way, only to further expand the scale to borrow reduce production cost. Whether it is up or down or parallel merger, will soon be launched soon." Wang Qinghong said, "before the same electronic in the same camp's CMO has always valued because of the TV panel, the face of pressure should be very fast with the other panel factory cooperation, at least the same assembly plant will deepen relations of cooperation, and to increase investment in the new era of the panel."

March 31, 2006, received a message in advance of the convening of an extraordinary general meeting of CMO, will be unanimously approved by the private placement to raise the total amount of not more than 350 million shares, par value of NT $10 per share in the case of changes in equity. The private placement of ordinary shares the proceeds will be used to redeem some special shares and a substantial capital. In this regard, Chi Mei, who declined to disclose the name of the high-level revealed that this is in preparation, Chi Mei will certainly be a big move in the near future. HannStar (HannStarDisplay) boss with our CMO owners are often in love art, sometimes together, with some big opportunities for cooperation should be universal.

Recently, these panel manufacturers have increased the intensity and frequency of mainland TV manufacturers." Liu Tangzhi said, this may be the most direct feeling, but the panel industry in Taiwan should also have a series of reactions." Sounding alarm

Although consumers and manufacturers in mainland TV assembly is a good news, but the panel for the mainland investment boom BOE and SVA panel enterprises and the move is equivalent to raging like a storm, raised the alert.

Since 2005, the mainland LCD panel production line investment in full bloom. Following boe,