Epistar and Formosa Epitaxy shares surge on merger news
Taiwan News, Staff Writer
2014-07-01 01:53 PM

Epistar Corporation (2448) announced Monday its intention to acquire Formosa Epitaxy (3061) with every 3.448 shares of Formosa Epitaxy swapped for 1 share of Epistar. Since this swap is at a 17% premium, Formosa Epitaxy shares surged to its one day price ceiling of NT$19.5 at the beginning of trading Tuesday with 690 million shares awaiting buy transactions. Epistar also reached its one day price ceiling at NT$79.1.

Calculated in terms of Epistar and Formosa Epitaxy’s June 30 closing prices of NT$74 and NT$ 18.25, respectively, the premium on this acquisition is 17.6%. Epistar stated, the company investigated M & A intentions in the Taiwan and Chinese LED industry in the first half of this year before finally settling on Formosa Epitaxy. In the future, Formosa Epitaxy will remain an independent entity and will not be incorporated into Epistar.

Market research institution LEDinside stated, the wave of consolidation in the LED industry continues. The acquisition of Formosa Epitaxy by Epistar, mitigates the market threat posed by Chinese chip manufacturer San’an Optoelectronics.

LEDinside points out, this merger will significantly increase Epistar’s MOCVD machine installations to 436, far ahead of the company’s closest competitors, and complete its plans for capacity expansion this year. San’an currently possesses 160 MOCVD installations and plans to expand capacity to 200 by 2018.

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