Compal Electronics Inc. is the world's second largest contract maker of notebook computers. The company offered to buy full control of its wireless device production division to lower company spending cost.
Compal would spend a hefty TWD16.1 billion for the acquisition of 52.2% of Compal Communications Inc. that it does not already own. This was according to a statement from the Taiwan based manufacturer yesterday. The TWD50.80 bid per share piece represented a 25% premium to the one-month average stock price of Compal Communications. This was according to separate statement by the company.
The company would acquire its wireless device unit as a shrinking global notebook market erodes profitability. Compal Electronics counts Lenovo Group Ltd. among its numerous clients. Compal's second quarter gross profit margin narrowed to 4.1% of revenue from 4.5% last year, according to an investor presentation in August.
The acquisition would be completed by April 2014. The transaction would be funded through the company's cash reserves and operating cash, said Compal Electronics.
Compal Electronics holds around 47.8% in Compal Communications.
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