USI Acquires Majority Stake in Production Base in Eastern Europe for Automotive
USI has announced that its wholly-owned subsidiary Universal Global Electronics Co., Limited entered into an Equity Transfer Agreement with ChungHong Electronics (Suzhou) Co., Ltd., intending to acquire its entire 60% stake in its Polish subsidiary Chung Hong Electronics Poland SP.Z.O.O. in Eastern Europe for RMB 78 million. It is also stipulated in the Agreement that within six months after the audit of financial statement of the Polish subsidiary for the year ended 2020, Universal Global Electronics Co., Limited can acquire the remaining stake in such subsidiary at 10 times the static P/E ratio.
Following the development of 2018 “expansion” strategy earlier, USI has expanded its presence in a new sector after signing joint venture agreement with Qualcomm in Brazil and memorandum of understanding for joint venture with Cancon (joint stock company of Sugon).
According to the statistics of MMI, USI ranked 16th among global electronic manufacturing service providers in 2017. After the completion of the equity acquisition of Polish company for this time, the Company will have a production base in Europe to expand its footprint in Europe to build a more complete global supply system. In the context of the intensified trade war between China and the United States, the completion of this merger and acquisition of Polish company is of symbolic significance to the business expansion and accelerated development of USI.
According to C. Y. Wei, President of USI, the Company now has a global customer base, with production bases mainly in Shanghai, Kunshan, Shenzhen, Taiwan and Mexico, among which, automotive electronics products are mainly produced in Shanghai and Mexico. In order to meet the demands of customers for delivering automotive electronics products in Europe, the Company continuously searched for production bases in Europe and finally chose to acquire a subsidiary of ChungHong Electronics (Suzhou) Co., Ltd. in Poland. According to the annual report for 2017, the Company’s revenue from automotive electronics products in 2017 was RMB 1.678 billion, accounting for 5.65% of the Company’s total revenue. The Company plans to first deliver automotive electronics products in Poland in the future and then roll out its industrial and server businesses in the medium and long term.
Jeffrey Chen, Chairman of USI, put forward the goal of “modularization, diversification and globalization” for the Company’s future development, defining that the Company will continue to strengthen its industry-leading D(MS)2 business positioning, and secure the global leader position in miniaturization (SiP) technology. It will further accelerate the growth of automotive electronics, industrial and server system related production lines, and actively combines extended expansion and inclusive growth opportunities through M&A to accelerate business growth and improve profitability, thus increasing the return to investors.