Computer monitor manufacturer will become world's largest after US$358m buyout of rival's operation TPV Technology is set to leapfrog Samsung Electronics to become the world's largest computer monitor manufacturer after signing a letter of intent to buy Royal Philips Electronics' monitor business as well as part of the Dutch giant's flat-screen television operations for US$358 million. The deal is aimed at bolstering TPV's economy of scale and production efficiency and allowing Philips to concentrate on product innovation and sales. TPV is the world's second-largest manufacturer of computer monitors. TPV chairman Jason Hsuan said yesterday that his company would fully integrate Philips' global OEM (original equipment manufacturing) sales platform and development centres in Taiwan as well as its manufacturing facilities in the mainland, Europe and Brazil within a year to 18 months after the deal was completed. 'In three years, I expect the synergies to be brought about by the streamlined operation would result in savings of at least US$100 million annually,' Mr Hsuan said. The acquisition would also see TPV's turnover more than double to surpass US$5 billion a year, he said. Philips executive vice-president Gottfried Dutine said: 'In today's world of digitalisation, Philips recognises that it's no longer enough to launch new products into [the] increasingly commoditised market.' ICEA Securities analyst Bertrand Chui said the larger economy of scale and higher margin of production under Philips' brands should lift TPV's gross margins and earnings. BNP Paribas Peregrine analyst Victor Lai said: 'The deal is also about taking an underperforming rival out of the industry, that is Royal Philips.' After the completion of the purchase, TPV's annual output will jump from 24 million units to 34.5 million. Philips' monitor business generated about US$2 billion in sales last year, while TPV expects its annual sales to reach about US$3.8 billion. A banking source said the Dutch giant's monitor business was 'marginally profitable' but declined to give any figures. JP Morgan is the final adviser to Philips, while ING Barings is advising TPV. To address concerns on whether TPV would be able to keep Philips' customers after the takeover, Philips has promised to buy a portion of its screens from TPV. Under the agreement, TPV will issue new shares worth US$147 million, or 15 per cent of the Hong Kong-listed company, to Philips, making it the second-largest shareholder of TPV. TPV will also issue US$211 million worth of five-year convertible bonds with a 3.35 per cent coupon to Philips. Philips can convert them into TPV shares at $5.241 each three years after they are issued. If the bonds are fully converted, Philips will become the single-largest shareholder of TPV with a 30 per cent stake.