Hon Hai buys into Asia Pacific for NT$11.6 billion
Taiwan News, Staff Writer
2014-05-27 10:26 AM
Hon Hai Precision (2317) subsidiary Ambit Microsystems announced Monday that it will subscribe to approximately 70% of Asia Pacific Telecom’s (3682) private placement at NT$20 per share for a total investment of NT$11.65 billion. Ambit will obtain a 14% stake and become a major shareholder. In the future the two companies will merge through stock swap and introduce international strategic partners.

Ambit will have the option of bringing in Asia Pacific approved international and strategic investors to subscribe to the remaining 30% of the private placement at NT$20 per share within one year of purchase approval. It is reported that Softbank’s subsidiary investment company SBI could be a potential investor.

Monday’s letter of intent was signed by Hon Hai chairman Terry Gou and Asia Pacific chairwoman Sophia Chiu. Ambit’s offer of NT$20 is a 14.68% premium on the private placement price of NT$17.44 per share approved by Asia Pacific’s board of directors.

Asia Pacific will convene a board meeting June 3 to approve the stock swap with Ambit. In addition to approving the private placement, Asia Pacific’s June 20 shareholder’s meeting does not rule out approving the merger at the same time. The merger will be completed in the latter part of this year or the beginning of 2015 at the earliest.

Market insider analysis indicates, after the Ambit and Asia Pacific merger, Asia Pacific’s marginal effect will be maximized through its telecommunications talent, 3G network and fixed network, base stations, customer service, and distribution channels.

Gou is aggressively laying his plans for Taiwan’s communications industry. After successfully securing Asia Pacific management rights Monday, the market is beginning to focus on whether Hon Hai will acquire Taiwan’s second largest cable television provider CNS. However, market insider analysis indicates, after Hon Hai acquires Asia Pacific, it must concentrate on its 4G rollout and may not possess the additional capital necessary to acquire CNS. It is far more likely for Ting Hsin International Group to win this dogfight.

The market reported earlier that Hon Hai offered NT$64 billion for CNS but, in reality, CNS has a number of other suitors including Ting Hsin, which has completed due diligence, and Far EasTone (4904). However, market insiders point out, whether Hon Hai’s NT$64 billion or the offers made by other entities, they all fall below CNS’s appraised value and, thus, will not be finalized at this time.

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