Hon Hai to buy Dell factory in Poland
Central News Agency
2009-12-03 06:57 PM
Taipei, Dec. 3 (CNA) Taiwan's Hon Hai Group has signed a deal to buy U.S. computer giant Dell's factory in Poland, further expanding its operation territory in Europe, Middle East and Africa (EMEA).

Following the transfer, Dell will become a customer of Foxconn, a division of Hon Hai Precision Industry Co., sourcing its desktops, notebooks, servers and storage systems for EMEA customers from the Lodz factory in central Poland, according to company announcements.

In a statement published late Wednesday, Hon Hai said PCE Paragon Solutions Kft., one of its units, has signed a contract to buy the facility with Dell Global B.V. and Dell International Holdings VIII B.V..

Financial details of the transfer were not disclosed and the agreement is subject to all the usual European Union regulatory approval and closing procedures. All employees at the Polish facility will keep their jobs and their positions.

After the deal is completed, industry analysts expect Hon Hai will be able to receive more orders from Dell, including the orders for making Dell's notebooks in 2011, threatening other Taiwanese outsourcing factories for Dell, such as Lite-On Technology, Pegatron Corp., Wistron Corp., and Quanta Computer.

Yuanta Securities analyst Chen Feng-feng noted that as the factory in Poland has been under gross profit margin pressure, the transfer will have limited impact on Hon Hai's profit in 2010.

UBS Securities is more optimistic about Hon Hai's performance next year. It issued a a“buy”rating on Hon Hai Wednesday, and raised its target price for the stock in 2010 to NT$184, from the previous target price of NT$144.

The deal with Dell is the latest acquisition launched by Hon Hai Group, the world's largest contract electronics maker, after it announced in November that its affiliate Innolux will merge with Chi Mei Optoelectronics to bid for the liquid crystal display (LCD) industry's top position, and September's decision of buying a Sony's LCD TV assembly plant in Mexico.

Hon Hai shares were at NT$138.5 when the market closed Thursday, up NT$0.5 from the previous day's close.

(By Carol Yeh and Fanny Liu )

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