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June 23, 2017

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Forepi shareholders green light an Epistar takeover at end of the year

TAIPEI, Taiwan -- Formosa Epitaxy Incorporation (Forepi, 璨圓光電) shareholders on Monday approved a merger with Epistar Corporation (晶元電子) through share conversion later this year, with Epistar being the extant company.

Forepi and Epistar yesterday held their annual shareholders' meetings. Shareholders of both companies certified a proposal which allows Epistar to merge Forepi by issuing over 117 million new shares for a stock conversion deal, at the swap ratio of 1 share of Epistar to 3.448 shares of Forepi. The base date for the swap deal is Dec. 31, from the day Epistar will wholly seize the shares of Forepi.

Epistar's Vice President of Finance and Accounting Rider Chang (張世賢) told local media that both Epistar and Forepi will hold extraordinary shareholders' meetings on Sept. 1 to approve further details of the merger deal.

Chang said that the market capitalization of Epistar is bound to pass NT$11 billion, boosted by the newly issued 117 million shares, which amounts to NT$1.75 billion as well as the NT$9.36 billion total assets of Forepi. The total workforce of Epistar will be expanded to 6,700 employees after the merger, according to Chang.

Chang pledged that the merger would deliver synergy in six to 12 months.

After the completion of the merger deal, mainland China's LED maker San'an Optoelectronics Co. (三安光電) is expected to become the second largest shareholder of Epistar. In response, Chang said that San'an's presence in Epistar's shareholder's list would not have a chance to rock the boat since there won't be any change of names in Epistar's incumbent board until two years pass and a new election is held.

Xiamen-based San'an Optoelectronics Co. became the largest shareholder of Forepi with a roughly 19.9-percent stake on August 2013.

Epistar is Taiwan's largest manufacturer of LEDs while Forepi is a highly ranked LED chip supplier in Taiwan. The backward vertical merger is expected to bring the benefit of greater capacity, according to analysts.

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