Tatung swaps PC unit for stake in Elitegroup

Analysts welcomed the deal, saying it would allow Tatung to offload its low-margin desktop unit and focus resources on the 3C sector

Tatung Co (大同), Taiwan's leading home appliance maker, announced yesterday that it will swap its desktop computer business unit for a 30 percent stake in motherboard maker Elitegroup Computer System Co (精英電腦).

The deal, which is to be completed by Jan. 1, will make Tatung the largest shareholder in Elitegroup, Chang I-hua (張益華), Tatung's secretary-general, said at a press conference at the Taiwan Stock Exchange yesterday.

"The synergies make this a good deal for Tatung. It is time for the company to get out from under this heavy burden," said Simon Yang (楊勝帆), an analyst with Topology Research Institute (拓墣產業研究所).

According to Yang, Tatung's move is similar to IBM Corp's sale of its PC unit to Lenovo Group Ltd (聯想), China's largest PC vendor.

Tatung has to get rid of the low-margin desktop business as the unit does not earn much money and the company lacks the capacity for desktop mass production, he said.