Chimei stops short in Innolux divestment moves
CNATAIPEI--Chimei Corp., one of Taiwan's biggest plastics material suppliers, said Tuesday that it will not sell its remaining stake in Taiwan-based Innolux Corp. for now after divesting part of its holdings in the flat panel maker a day earlier.
October 2, 2013, 12:09 am TWN
Chimei said that although it sold 100 million Innolux shares on Monday, it still wanted to maintain a partnership with the flat panel manufacturer and would continue to hold a stake in the company.
The plastics material supplier did not specify, however, the size of the stake it hoped to hold in Innolux in the future.
In a statement released Monday, Chimei said it cut its stake in the flat panel maker to 9.93 percent from about 11 percent by disposing of 100 million shares at NT$13.85 (US$0.47) a share in after-hours trading. The sale helped it raise NT$1.385 billion.
Chimei said the funds will be used as working capital, and when and whether it will further reduce its holdings in Innolux will depend on its financial situation in the future.
The stake was not sold through negotiations with any specific investor, Chimei said, and it did not expect that the shares' buyers will get involved in the decision-making process of Innolux's board of directors or have a say in the flat screen company's operations.
In a statement, Innolux described the stake sale by Chimei as diversifying its shareholder structure and said that because the company is run by professional managers, its operations remained normal.
Innolux Closed Down 0.35 Percent
The share sale did, however, affect market sentiment toward Innolux on Tuesday. Investors generally lowered their holdings in the company, dragging its stock down by 0.35 percent on the Taiwan Stock Exchange.
The broader market's weighted index staged a mild technical rebound to end 0.16 percent higher.
Market analysts said it was no surprise that Chimei reduced its holdings in Innolux after representatives from the company retreated from the flat panel's board of directors in early 2012 when the Hon Hai Group, the world's largest contract electronics maker, took over Innolux's management.
After pulling out of Innolux's management and cutting its ownership stake, Chimei is expected to concentrate its efforts on its core business, the analysts said.
In terms of the fundamentals of the global flat panel industry, market research group WitsView said the sector is still faced with inventory adjustments after China ended a year-long subsidy program on TV purchases on May 31.
The inventory cutting efforts have hurt the pricing power of flat screen makers, WitsView said.