B.J. Lee: Epistar Won’t be Slashing FOREPI Jobs After Merge

Quotes/ Perspectives from LEDinside: 
Current market observations indicate some irregularities in the LED lighting and LED backlighting market in 3Q14, which has shown lower than expected demands, said Roger Chu, Research Director of LEDinside. If Chinese manufacturers maintain full utilization rates, while Taiwanese manufacturers utilization rates drop than Chinese manufacturers might have used low pricing strategies to acquire LED orders.

Epistar and FOREPI stockholders have approved the proposed merger between the two companies today, according to a report by Cynes.com. FOREPI stocks will be swapped at a rate of 3.448 per Epistar share. 

At Epistar’s shareholders meeting, the company Chairman B.J. Lee remained upbeat about LED industry’s performance in 2015 and once again emphasized the merger was necessary to meet growing market demands next year. The merger with FOREPI is expected to improve the company’s production capacity, and improve FOREPI’s yield rates. He also said Epistar has no intention of slashing FOREPI after the merge.

The company plans to issue 174 million stocks to FOREPI shareholders, at a price of NT $10 per share (US $0.33), bringing the total amount paid outs to investors to NT $1.75 million. FOREPI will become a wholly owned subsidiary after the merge.

Taiwan’s LED industry faces intense competition from international manufacturers, and it is increasingly difficult to expand business, said FOREPI. The trend of Taiwanese upstream manufacturers integrating and shifting towards enterprise management models will become necessary to integrate resources, expand company size, and lower management costs to improve company efficiency. 

Epistar’s stock performance was recently affected by market rumors that some LED backlighting client had cut back on orders. Some clients reduced LED backlighting orders because of weaker performances for certain TV models, and high inventory levels for certain lighting products, an Apple Daily report cited Epistar spokesman Rider Chang saying.

Current market observations indicate some irregularities in the LED lighting and LED backlighting market in 3Q14, which has shown lower than expected demands, said Roger Chu, Research Director of LEDinside. If Chinese manufacturers maintain full utilization rates, while Taiwanese manufacturers utilization rates drop than Chinese manufacturers might have used low pricing strategies to acquire LED orders. 

According to the same Apple Daily report, some Taiwanese financial institutes have even forecasted Cree’s recent investment in Lextar will impact Epistar’s earnings. Cree is an Epistar client. The unnamed financial institute projected Lextar would try and overtake Epistar’s orders by acquiring all of Cree’s blue LED chip orders. 

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