Lite-On Technology to Acquire All Shares of Optical Disc Drive and SSD Maker Lite-On IT

Lite-On Technology Corp. announced that its board of directors approved to commence a cash tender offer to acquire the remaining outstanding shares of Lite-On IT Co., Ltd. through a 100%-owned subsidiary, Baoyuan Co., Ltd., at NTD 32.75 per share, in sight of industry trends and integration of corporate resources.

The cash tender offer will start from January 31st, 2013 and conclude on March 15th, 2013. The acquisition is conditioned upon the purchase of minimum tender of 81,542,619 shares (i.e. 8.89% of Lite-On IT outstanding shares) and the approvals from domestic and international regulatory parties.

After the completion of the tender offer, Baoyuan will issue redeemable preferred stock as consideration in exchange for the remaining Lite-On IT common shares. Subsequently, Lite-On will commence the merger with Baoyuan and directly own 100% stake of Lite-On IT.

Lite-On expects to continuously retain its leading position as the world’s largest player of optical drives and penetrate SSD market in the information and communication technology industry and strengthen its competitiveness via this acquisition. With the benefit of shared R&D and product know-how expertise, Lite-On will be capable of providing a range of products to global clients of both companies and materialize the cross-selling opportunities. In addition, with synergies of cross-marketing, the rise of high growth markets in cloud computing, automotive electronics, medical and biotech applications will further bring revenue growth and profit expansion.

The acquisition will not only optimize economies of scale in procurement and effect the strong relations with supply chain for both companies, but also integrate corporate resources in sales, R&D, procurement, finance and accounting management so as to further reinforce Lite-On overall operating performance, while continuing to improve cost efficiency and profitability. By means of this consolidation, it will further enhance Lite-On’s profits, return on equity, corporate governance as well as corporate value.

Lite-On plans to acquire between 81,542,619 shares (i.e. 8.89% of Lite-On IT outstanding shares) and 532,886,485 shares (i.e. 58.09% of Lite-On IT outstanding shares) during the tender offer period. Based on the acquisition price and the highest number of shares to be acquired, the total consideration amount of the tender offer will be up to NTD 17.45 billion.

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Lite-On Technology originally holds a 42% stake in Lite-On IT, and its holdings Baoyuan will increase it to 100% after this public acquisition.

In 1995, Lite-On gathered some scientist and engineers from ITRI (Industrial Technology Research Institute) to start an optical disc drive research and manufacturing business. To focus on this industry, Lite-On IT was spun as a separate company in 1999, listed in Taiwan in 2001, and was listed on the Taiwan Stock Exchange in 2004.

In 2006 Lite-On IT bought BenQ's Taiwanese optical disc drive business propelling the company to #2 in the industry and cementing its position as the world's largest OEM/ODM optical disc drive manufacturer.

The following year Lite-On IT acquired 49% share of Philips & BenQ Digital Storage Corporation (PBDS) from BenQ. Headquartered in Taipei, Taiwan, PBDS, a joint venture company of Royal Philips Electronics and BenQ, was renamed Philips Lite-On Digital Solutions Corporation (PLDS) with subsidiaries in Eindhoven, The Netherlands and in Fremont, CA.

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PLDS HQs in Taipei