UTAC announces purchase of NS Electronics Bangkok

One of the fastest growing companies in SGX, it has been a year of good news for United Test & Assembly Center Ltd. (UTAC). The company was admitted into the Straits Times Index this year and announced a huge jump in turnover and net profit. This week, it announced that it will pump in around S$500 million in Singapore amidst increasing demand for its services. Trading in UTAC's shares was halted on Friday morning and it turns out UTAC will purchase 68.45% share of NS Electronics Bangkok (NSEB) from UBS Capital and make an offer for the rest of the shares. The company plans to use an all cash offer of US$175 million for the purchase of all the shares in NSEB.

The acquisition of NSEB will allow UTAC to take over Taiwan's Powertech to become the world's 6th largest chip testing company. In addition, it will enhance the reach of UTAC as NSEB only have one overlapping customer with UTAC. NSEB made a net profit of around US$11.9 million for FY2005 and it is expected to be earnings accretive to UTAC for the year 2006. Overall, the fitting of the company into UTAC looks good and it should also increase EPS of the enlarged entity to be US$0.0335 from US$0.0306.