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MediaTek shares up on buy-in deal

MediaTek shares up on buy-in deal

Taipei, Sept. 8 (CNA) Shares of MediaTek Inc. (???), Taiwan's largest integrated circuit designer, moved higher Tuesday morning after getting a boost from a deal it announced a day earlier to acquire smaller rival Richtek Technology Corp. (??) on hopes that the acquisition will create synergy between the two companies, dealers said. Richtek shares also trended higher as investors were encouraged by the acquisition price set by MediaTek which represented a more than 4 percent premium over Richtek shares' closing level seen Monday, they said. As of 11:18 a.m., shares of MediaTek had gained 3.85 percent to NT$256.00 (US$7.80) with 8.14 million shares changing hands, while shares of Richtek had added 1.34 percent to NT$189.50. The weighted index on the Taiwan Stock Exchange was up 0.38 percent at 8,017.11 points. "Investors rushed to pick up MediaTek shares in the wake of the buy-in deal this morning," KGI Securities analyst Phil Chu said. "Since MediaTek and Richtek have quite different product portfolios, the acquisition showed that the suitor wants to extend its reach beyond smartphone chip supply and enter the booming Internet of Things (IoT) market." Smartphone chips accounted for 60-65 percent of MediaTek's total sales, while power management ICs used by PCs, notebook computers and flat panels made up 50-60 percent of Richtek's total revenue. "When growth of the global smartphone market has showed signs of slowing down, the deal indicated that MediaTek aims to jump over the current hurdles by devoting more efforts toward penetrating the IoT arena," Chu said. The IoT refers to devices of all types, such as security monitors, vacuum cleaners and mobile phones, connected to the Internet and to each other to create a more interconnected user experience. In a news conference held Monday, MediaTek announced a tender offer to acquire a 35-51 percent stake in Richtek during the Sept. 8-Oct. 7 period with an acquisition price of NT$195, which represented a 4.27 percent premium over Richtek's closing price on Monday. After the tender offer is completed, MediaTek said that it will launch the second stage of the acquisition plan to buy the rest of Richtek's outstanding shares to hold a 100 percent stake in the power management IC supplier. MediaTek said that the acquisition of Richtek is scheduled to be completed in the second quarter of next year. "But, I do not expect that the acquisition of Richtek will help MediaTek rake in any quick profits and the deal needs some time to show its benefits," Chu said. "Therefore, MediaTek shares could face strong technical resistance at around NT$260 in the short term amid lingering concerns over the slowing smartphone market." In August, MediaTek posted NT$19.01 billion in consolidated sales, up 6.12 percent from a month earlier with market analysts attributing the growth to an increase in shipments of chips used for 4G mobile networks. The August figure hit a new high in five months. MediaTek's sales for the July-August period totaled NT$36.92 billion, therefore the company is unlikely to have any difficulties achieving its third quarter sales guidance of NT$51.7-55.5 billion, up 10-18 percent from a quarter earlier. The second quarter sales forecast indicated that MediaTek's revenue for September will fall from August. Amid cautious sentiment toward global smartphone demand, MeidaTek has forecast that its sales for 2015 will fall 5-10 percent from a year earlier. (By Jackson Chang and Frances Huang)


Updated : 2021-09-22 01:30 GMT+08:00