Lite-On IT and BenQ to Form a Strategic Alliance through Manufacturing Integration in Optical Storage Products
TAIPEI, TAIWAN, 10 April 2006 - Lite-On IT and BenQ today announced that they have formed a strategic alliance that will bring together two of the industry's leading players and enhance the overall competitiveness of Taiwan's storage sector. The transaction is expected to increase Lite-On IT's global market share to 27%, making it the world's No. 2 optical disk drive (ODD) maker.
As part of the alliance, Lite-On IT will acquire BenQ's storage-related assets, including BenQ's ODM customer portfolio and the rights to use BenQ's technology portfolio. Lite-On IT will also receive order commitments on BenQ-branded storage products.
“This strategic alliance combined with our manufacturing advantages, will allow Lite-On IT to further sharpen its competitiveness in the ODM market and become the No. 2 ODD manufacturer worldwide,” expressed Raymond Soong, Chairman of Lite-On IT. “In partnering with BenQ, Lite-On IT expects to benefit from increased manufacturing efficiency, greater economies of scale, and a larger market share.”
“We believe our customers will benefit from this powerful partnership,” commented K.Y. Lee, Chairman of BenQ Corporation. “BenQ will continue focusing on the marketing and sales of our storage products and this strategic transaction will allow BenQ to better address our ODD branded and 3C opportunities and customers’ needs,” added Mr. Lee.
Terms and Conditions
Lite-On IT will acquire BenQ's storage-related assets, including BenQ's ODM customer portfolio and the right to use BenQ's technology portfolio consisting of storage-related patents and licenses. Lite-On IT will also receive order commitments on BenQ-branded storage products. BenQ will receive approximately NT$1.2 billion in cash and acquire a 13% stake in Lite-On IT. With this transaction, BenQ will become Lite-On IT's second largest shareholder and a long-term strategic partner. Additionally, BenQ will acquire two seats on Lite-On IT's board of directors. Both companies expect to close the transaction on or about 1 June 2006.
I wonder how this will affect Lite-On's manufacturing deal with the joint venture between NEC and Sony. Are we going to see the same drives being sold under the Lite-On, BenQ, NEC and Sony brands?