TCL Multimedia buys LCD unit

TCL Multimedia Technology Holdings, one of the mainland's biggest television manufacturers, has landed a deal to buy the liquid crystal display module business of TCL Optoelectronics Technology (Huizhou) from its parent firm, TCL Corp.

Shenzhen-based TCL Multimedia has agreed to a purchase price of 246.497 million new shares valued at 655.572 million yuan (HK$788.8 million), a deal which is subject to independent shareholders' approval.

In a filing with the Hong Kong stock exchange, TCL Multimedia described the transaction as a means to further integrate its production process and provide a new revenue-generating operation.

Li Dongsheng, the chairman of TCL Multimedia, said the proposed acquisition 'will further increase [the company's] competitive advantage in the LCD TV market'.

According to market research firm DisplaySearch, TCL Multimedia's total television market share ranked seventh globally and No 2 on the mainland last year. The company was also ranked No 3 in domestic LCD television sales, with a 13.6 per cent market share.

The acquisition target, TCL Optoelectronics, manufactures and sells the so-called LCD module, which is the component required for the assembly of connectors, integrated circuits, printed circuitboards, backlight and mechanical parts that are used in the manufacture of LCD televisions.

Huizhou Coretronic, the target firm's lone subsidiary, makes and sells so-called cold cathode fluorescent lamps, the light source for LCD screens and light-emitting diode backlit units.

Li said the components made by TCL Optoelectronics were all essential in the highly competitive LCD television market. The cost of buying LCD modules, for example, accounted for 70 per cent of TCL Multimedia's total manufacturing costs last year.

Hong Kong-listed TCL Multimedia, which posted turnover of HK$6.581 million in the first quarter, now makes 10 million LCD televisions annually.

Since TCL Optoelectronics also supplies its modules and backlit units to other major television brands, Li said its acquisition would help 'further diversify TCL Multimedia's product offering' and provide a new revenue source.

LCD televisions are expected to account for 84 per cent of all television shipments this year, DisplaySearch said in a report last May.