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UPDATE 1-Taiwan's Innolux does not rule out merger with AU Optronics
February 24, 2014 / 4:16 AM / 4 years ago

UPDATE 1-Taiwan's Innolux does not rule out merger with AU Optronics

* AU shares hit almost five-month intraday high

* Taiwan govt gives blessing to possible merger

* A merger not likely to come soon-fund manager (Adds quotes, details)

By Faith Hung

TAIPEI, Feb 24 (Reuters) - Innolux Corp, the world’s No.3 flat-panel maker, declined to rule out a potential merger with smaller rival AU Optronics, but a fund manager said such a potential merger may not be realized soon.

Terry Gou, chairman of Foxconn Technology Group, which controls Innolux, met with Taiwan’s economics minister, Chang Chia-juch, over a possible merger with AU, the Economic Daily reported, citing the minister.

The minister told Gou, whose Foxconn is a major supplier of Apple Inc iPhone 5s and iPads, the government would be glad to see such a deal, but will not step in to push for one, the report said.

“The government is just trying to be a matchmaker,” said Alex Wang, a fund manager of Fuh Hwa Securities Investment Trust. “Will a merger come through? We don’t know. Only the big bosses of the two companies would know.”

Innolux and AU have suffered a series of quarterly losses due to stiff competition from South Korean rivals and steep price cuts. A merger would help Taiwan better compete with South Korea and cut costs of the two companies.

Shares of AU rose 6 percent to their highest intraday level since early October and Innolux was up 0.1 percent. Both beat the broader market, which fell 0.5 percent.

“We are not against such a merger...If the government can offer assistance, it would be good,” Innolux spokeswoman Sophia Cheng said.

AU Optronics declined to comment on reports of a potential merger and told Reuters it had no specific plan for now, although it was open to industry consolidation. (Editing by Anne Marie Roantree, Paul Tait and Matt Driskill)

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