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Hon Hai to Buy Asia Pacific Telecom Stake Ahead of Deal

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May 27 (Bloomberg) -- Hon Hai Precision Industry Co. agreed to buy an NT$11.7 billion ($388 million) stake in Taiwanese carrier Asia Pacific Telecom Co. and negotiate a takeover as it prepares to offer fourth-generation wireless services.

Hon Hai unit Ambit Microsystems Corp. will purchase 583 million new APT shares in a private placement at NT$20 apiece, a 12 percent premium to its previous closing price, and could introduce international strategic investors to buy a further 244 million new shares, the companies said in exchange filings yesterday. APT said May 9 it planned to sell shares via private placements and Hon Hai said May 8 its Ambit unit would best serve the interests of APT.

APT rose as much as 6.7 percent before closing 1.1 percent higher at NT$18.05 in Taipei, giving the carrier a market value of about NT$60 billion, data compiled by Bloomberg show. Hon Hai climbed 0.3 percent and the benchmark Taiex index added 0.2 percent.

Ambit and APT will negotiate a full merger via a share swap, they said. Ambit will hold about 15 percent of the Taipei-based carrier after the initial placement, APT Chief Financial Officer Annie Hung said in a briefing today.

Hon Hai, an assembler of Apple Inc.’s iPhones founded by billionaire Foxconn Technology Group chairman Terry Gou, is moving beyond contract manufacturing to increase margins and boost revenue. Acquiring APT, which had 2.1 million subscribers at the end of April, may help Ambit roll out its network after winning a fourth-generation license last year.

Hon Hai beat rivals including Ting Hsin International Group, another new entrant to Taiwan’s mobile market which had proposed a merger of Asia Pacific Telecom with its Taiwan Star unit. Ambit and APT expect to reach a decision on merger terms by June 20, the companies said.

Gou has a net worth of $6.1 billion and is Taiwan’s third-richest person, according to the Bloomberg Billionaires Index.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Aaron Clark

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