Inari Amertron to form JV with Taiwan’s PCL

Pix for Joseph Chin. Inari Technology Sdn Bhd. Pix by GARY CHEN/The Star/5 February 2016.

KUALA LUMPUR: Inari Amertron Bhd plans to form a joint venture in China with Taipei-listed semiconductor firm PCL Technologies Inc and has bought a 9.7% equity interest in the latter for T$355mil (RM44.7mil).

Inari, which provides electronics manufacturing services, said it had signed a memorandum of understanding (MoU) on Tuesday with the maker of fibre-optic transceiver (transmitter and receiver) modules.

The aim is to set up a 50:50 joint-venture entity (JVE) in China to provide outsourced semiconductor assembly and test (OSAT) services to major customers in the republic, with particular focus on front-end OSAT services, Inari told Bursa Malaysia.

The parties expect to list the JVE in China within five years. 

On the PCL share acquisition, Inari said the purchase price of T$71 (RM8.94) per PCL share represented a premium of 8.40% above the closing price of T$65.50 as at March 7.  

“The acquisition represents an investment opportunity which allow Inari to invest in a Taiwan Stock Exchange-listed semiconductor company whose core operating businesses are complementary to Inari and it is profitable, well run and has a significant presence in China,” the company explained.

Both parties, it said, would do their utmost to execute definitive subscription and shareholder agreements within 45 days from the date of the MoU.

They would also negotiate in good faith for the setting up and registration of the JVE within 60 days from the date of the MoU. The JVE will have an initial capitalisation of US$20mil (RM82.5mil).

Inari’s 100% owned subsidiary in China, Amertron Technology (Kunshan) Co Ltd (ATK), would be injected into the JVE as a wholly-owned subsidiary, subject to a satisfactory due diligence audit of ATK by PCL.

“The MoU represents an opportunity and commitment to foster a business relationship with PCL with a view to collaborate and expand the OSAT and other semiconductor services in China. The MoU will also enable Inari to diversify and increase its revenue and earnings stream,” said Inari.

PCL is primarily engaged in manufacturing and selling optical transceiver modules. It also provides inspection, maintenance, processing and installation services related to its products.

For the financial year ended Dec 31, 2014, PCL made an after-tax profit of T$253mil (RM31.8mil). For the nine months to Sept 30, 2015, it posted T$188mil (RM23.7mil) in after-tax profit.

Inari shares fell 4 sen to close at RM3.23 on Tuesday, with 3.023 million shares changing hands.