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Hon Hai announces merger with Ambit

Nov 07, 2003

Hon Hai Precision Industry Co., one of the world's largest contract manufacturers of electronics gear, plans to merge with networking equipment maker Ambit Microsystems Corp., the Taiwanese companies announced Thursday. The transaction is worth about 36.64 billion New Taiwan dollars (US$1.07 billion), based on Hon Hai's closing share price Thursday and Ambit's 354 million outstanding shares. Ambit's chief financial officer, Albert Wang, said the companies hoped to complete the merger by March 19, 2004, although no official date had been set. After the share swap, Ambit will become part of Hon Hai, Wang said. Hon Hai will swap 0.672 of its share for each Ambit share, he said. "This is a good combination for our companies," Wang said. Hon Hai's capital will be close to 27.6 billion New Taiwan dollars (US$811.28 million) after the merger, the company said. The board of directors at both companies have passed resolutions to accept the terms of the deal, which still requires shareholder approval. Hon Hai makes a wide range of electronic gadgets - mainly in the personal computing space - for companies like Dell Inc., Hewlett-Packard Co. and Sony Corp. Lately, though, the Taiwan firm has been on a telecommunications buying spree. A Hon Hai unit last month acquired a mobile phone factory in Mexico from Motorola Inc. and another subsidiary bought Finnish handset parts maker Eimo Oyj. Aiming for more telecom and networking orders should boost Hon Hai's bottom line since the sector pays better margins than the computer space, said Weidone Chen, analyst at Grand Cathay Securities. It also shows "Hon Hai is aggressive in expanding in the global electronics manufacturing services industry," he said. Source: Associated Press

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