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Asia Today ISSN 1861-4604 Tuesday, October 23, 2018

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Electronics component giant Hon Hai buys stake in SK CandC

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TAIPEI, Taiwan - The world's biggest electronics component maker, Hon Hai Precision, also known as Foxconn Technology Group, Monday said it was buying a 4.9 percent stake in South Korean IT services provider, SK CandC.

The deal worth nearly $377 million is part of Hon Hai's long term investment plan for a broader effort to diversify away from the contract manufacturing business, said the company in a statement.

The deal also marks Hon Hai's second merger in less than two months.

Hon Hai assembles most of Apple Inc.'s iPhones and iPads. The company has been venturing into other higher-margin businesses, which include providing telecommunication services in Taiwan and selling smartphone accessories under its own brands.

Hon Hai shares rose and closed 1.42 percent higher at NT$100 in Taipei trading, after the company announced the deal before the market opened Monday. This is the highest rise in more than four years.

Hon Hai paid 155,500 won or $153.3 per share for the stake, which was for "long-term investment", according to the company statement.

In a filing with the Taiwan Stock Exchange, Hon Hai said it bought 2.45 million shares of SK CANDC Co from Chey Tae-won, chairman of SK Holdings Co and the largest shareholder of SK CANDC.

Chairman of Hon Hai Terry Gou had recently remarked that his company will focus on development in four key areas -- smart grid networks, smart broadband networks, smart information networks and cloud computing-based artificial intelligence networks.

"We will launch new investment projects from the second half of this year through next year," Gou told shareholders at the company's annual general meeting on Wednesday last week.

In a separate statement, Hon Hai said the investment would benefit current operations while supporting its efforts to develop new businesses.

The deal follows Hon Hai's recent merger of its telecoms subsidiary Ambit Microsystems Corp with Asia Pacific Telecom Co.

SK CandC was founded in 1991 and its headquarters are in Seongnam City, south of Seoul.

The SK Group also includes top mobile carrier SK Telecom Co and SK Hynix Inc, the world's second-largest memory chip producer.

Experts said the transaction would help accelerate Hon Hai's transformation from an electronics manufacturer into a technology service provider.

SK CandC's businesses include e-commerce, smart cards, energy management and storage systems, smart meters and cloud computing.

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