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another 10 billion-level acquisition finalized!

tcl technology (000100) announced on the evening of september 26 that it plans to acquire 80% of the equity of lg display (china) co., ltd. ("lgdca") and 100% of the equity of lg display (guangzhou) co., ltd. ("lgdgz") through its controlling subsidiary tcl huaxing optoelectronics technology co., ltd. ("tcl huaxing"), as well as the relevant technologies and support services required for the operations of lgdca and lgdgz. the basic purchase price is 10.8 billion yuan (rmb, the same below).

for tcl technology, this acquisition will also be of great benefit to it in enriching its semiconductor display production line technology, deepening its strategic cooperation with international customers, enhancing industrial synergy and scale advantages, and improving its long-term profitability.

planned to acquire for rmb 10.8 billion

tcl technology entered the semiconductor display field in 2009 and has successively established 9 panel production lines through self-construction and industrial integration. its products cover tv, interactive whiteboard, splicing screen, display, car, tablet, mobile phone and other fields. the market share of its main products ranks first in the industry. the company will continue to consolidate its leading advantages in large-size business from efficiency and products to technology and ecology, accelerate the high-end differentiation strategy of small and medium-size business, and continuously optimize its business, product and customer structure.

lgdca is a 8.5-generation large-scale lcd panel factory established in china by lg display co., ltd (lgd for short). its main products are large-size lcd panels for tv and commercial display, with a designed monthly production capacity of 180,000 large panels; lgdgz is a module factory, whose main products are lcd display modules, with a designed monthly production capacity of 2.3 million units. both lgdca and lgdgz are located in huangpu district, guangzhou.

the transaction plan shows that in order to further enrich semiconductor display production line technology, deepen strategic cooperation with international customers, enhance industrial synergy and scale advantages, and improve long-term profitability, tcl technology plans to acquire 80% of the shares of lgdca and 100% of the shares of lgdgz held by lg d and its affiliates through its holding subsidiary tcl huaxing, as well as the relevant technologies and support services required for the operations of lgdca and lgdgz. the basic purchase price is 10.8 billion yuan.

the final purchase amount will be adjusted based on factors such as profit and loss during the transition period and the time of delivery. the transaction is intended to be paid in cash, with the source of funds being tcl huaxing's own or self-raised funds.

tcl technology stated that the basic purchase price of this transaction was based on the financial statement data of lgdca and lgdgz as of december 31, 2023 and the results of tcl huaxing's due diligence on them, combined with the operating conditions of lgdca and lgdgz, industry valuation levels and subsequent related arrangements, and was determined through consultation among the parties to the transaction. the final delivery price of this transaction will be adjusted based on the basic purchase price based on factors such as transition period gains and losses and the time of delivery.

strengthen competitiveness and enter the global customer network

looking back at the transaction process, at the beginning of last month, tcl technology and lgd issued an announcement, disclosing that tcl huaxing was confirmed as the preferred bidder for 70% of lgdca's equity and 100% of lgdgz's equity. this announcement confirmed that the equity share of lgdca that it intends to acquire will be changed from 70% to 80%.

the announcement disclosed that the transaction is intended to be paid in cash, with the source of funds being tcl huaxing’s own or self-raised funds; the payment of the equity transfer price in this transaction will be made in installments.

as a multi-billion-dollar m&a project in the panel industry, the ownership of lgd's guangzhou factory has always attracted much attention. in fact, the lcd industry has entered a relatively mature development stage, and continuous industry chain integration is an inevitable trend in the industry. tcl huaxing's successful acquisition of lgd's guangzhou panel factory and supporting module factory can achieve the integration of panel resources, optimize the industry structure, promote healthy competition in the display panel field, and promote the long-term stability and healthy and sustainable development of the semiconductor display industry.

it is understood that tcl huaxing previously focused on vertically aligned va panels. by integrating lgdca's ips production capacity and technology, tcl huaxing can continuously optimize its product structure and further meet the market's demand for wide viewing angles and color accuracy. at the same time, the integration and innovation of technology will not only help tcl huaxing accelerate product iterations, but will also promote it to optimize its patent portfolio and consolidate the company's competitiveness.

tcl technology pointed out in the announcement that this acquisition will also help the company to leverage scale and industrial synergy. after the acquisition is completed, lgdca will form a "twin" factory with tcl huaxing t9 production line in guangzhou, which will help optimize resource allocation, reduce operating costs, improve operating efficiency, and enhance production line competitiveness and the company's long-term profitability.

in addition, the smooth progress of this merger and acquisition will help tcl huaxing enter the target company's global customer network, deepen the company's strategic cooperation with international customers, provide strong support for the company's global layout and diversified product strategy, and help improve the company's performance.

on the evening of august 26 this year, tcl technology disclosed its 2024 semi-annual report. during the reporting period, tcl technology achieved operating income of 80.224 billion yuan, and net profit attributable to shareholders of listed companies of 995 million yuan, a year-on-year increase of 192.28%, and net operating cash flow of 12.633 billion yuan.

according to the announcement, tcl technology's semiconductor display business has maintained strong growth momentum, with operating revenue of 49.877 billion yuan in the first half of 2024, a year-on-year increase of 40.39%, and net profit of 2.696 billion yuan, a year-on-year improvement of 6.145 billion yuan. in particular, the second quarter achieved a single-quarter profit of 2.157 billion yuan, a month-on-month increase of more than 300%.