Taiwanese Electronics Giants Deny Reported Tie-Up

Tag : electronics

By Dan Nystedt
September 23, 2008 — IDG News Service —
Two of Taiwan's largest contract electronics manufacturers onTuesday denied reports they were in talks over a tie-up or buy-out,but investors sent their stocks higher on the speculation anyway.
Taiwan's Economic Daily Enterprise reported that Hon Hai PrecisionIndustry, which assembles products ranging from Apple iPhones toSony PlayStation 3 game machines, has been in talks to buyPegatron, Asustek's contract manufacturing arm, in a stock swap.
The contract electronics manufacturing industry has been one of thekey elements of low-cost digital gear for the past several years.Consolidation could mean higher prices overall since currently,there are a lot of electronics manufacturers for vendors to choosefrom, so vendors have all the pricing power.
Asustek split itself into three companies early this year in a bidto separate its contract manufacturing business from its brandedbusiness.
The local newspaper quoted analysts talking about a possible dealbetween the companies, but quoted Hon Hai as declining to commentand Asustek simply giving information about future plans that havealready been decided for Pegatron, none of which include Hon Hai.
Later on Tuesday, Asustek released a statement to the Taiwan StockExchange saying neither Asustek nor Pegatron have engaged in anytalks regarding a stock swap with anyone.
A Hon Hai representative said his company has denied the report.
Analysts believe a deal between Hon Hai and Asustek for Pegatronwould boost Hon Hai's laptop PC manufacturing business.
The report, though denied by both parties during market hours, sentthe stocks of both companies up.
Hon Hai gained 1.9 percent to end trade at NT$132, while Asustekstock rose 0.6 percent to end the day at NT$67.2. Copyright © 2008 IDG News Service. All rights reserved. IDG NewsService is a trademark of International Data Group, Inc.