Regarding the acquisition of the two LCD panel industries of CLP Panda, it was finally announced on September 23 that BOE, the world's largest LCD panel giant, became the ultimate buyer, with a total investment of 12.1 billion yuan.
On the evening of September 23, BOE issued an announcement stating that it plans to spend no less than 5.591 billion yuan to acquire 80.831% of the shares of Nanjing CEC Panda Flat Panel Display Technology Co., Ltd. (referred to as "Nanjing G8.5 Company"), and plans to spend no less than Acquired a 51% stake in Chengdu CEC Panda Display Technology Co., Ltd. (“Chengdu G8.6 Company”) for RMB 6.526 billion.
Prior to this, the industry, including Ding Technology, analyzed that in the context of Korean panel companies gradually withdrawing from LCD production capacity, only BOE or TCL Huaxing could win the CLP Panda production line. So why is the ultimate buyer BOE instead of TCL Huaxing?
Ding Technology previously analyzed that although the acquisition of the two LCD production lines of CEC Panda 8.5 and 8.6, it is of great value to BOE. For example, CEC Panda's IGZO and VA technology can complement BOE's IPS technology, which is beneficial to BOE. BOE expands its customer scale and meets the diverse needs of customers, and at the same time has a better and faster layout in the field of large-size OLED panels, but it is still in a period of cyclical adjustment in the panel industry, and BOE's comprehensive production capacity and share are ranked first in the industry Under the circumstances, the momentum for the acquisition of the two LCD production lines of CLP Panda 8.5 and 8.6 may be insufficient.
In addition, at the end of 2019, the leadership of BOE also publicly stated that BOE will stop investing in LCD production lines and focus more on OLED and the emerging Mini LED and Micro LED fields. This also makes Nail Technology believe that BOE will not easily take it. The production line of CLP Panda. Compared with BOE, TCL China Star, which is in a catching up state, seems to have stronger motivation to buy the above-mentioned production line. Whether it is based on the consideration of expanding the IT market, the NB market or the TV market, or the consideration of accelerating the development and industrialization of large-size OLED panels, TCL Huaxing seems to have more motivation to win the CLP Panda.
In addition, compared with the information released by BOE executives to stop continuing to invest in LCD production lines, TCL Huaxing executives have repeatedly stated that they will consider investing in mergers and acquisitions to achieve larger-scale development, which also makes Nail Technology optimistic that the latter will take the CLP Panda production line. So, why did the two LCD production lines of CLP Panda finally fall into BOE? There may be several reasons:
First, since the beginning of this year, TCL Huaxing has made frequent counter-cyclical mergers and acquisitions and investments, and continues to spend tens of billions of funds, fearing that it will have insufficient spare capacity and will also bring operational risks. In June, TCL Technology announced an investment of 2 billion in JOLED; on July 15, TCL successfully acquired 100% of the Zhonghuan Group for nearly 11 billion; in August, TCL Technology announced that it would spend 1.08 billion US dollars (about 7.622 billion yuan) to acquire Samsung 60% equity of Suzhou Panel Factory.
According to estimates, only 8 months of investment and acquisitions, TCL Technology spent about 24.8 billion yuan (including the value of issued shares and convertible bonds). If you continue to win the CLP Panda production line, it will cost more than 10 billion yuan, which is probably not a small challenge for the financially sound TCL Huaxing. In addition, through the acquisition of Samsung's Suzhou panel production line, TCL Huaxing's production capacity and market share have also approached BOE, and continued large-scale mergers and acquisitions will bring considerable management, operation, and sales risks.
Second, BOE, like TCL Huaxing, sees that the overall value of counter-cyclical mergers and acquisitions outweighs the risks. At the same time, under the situation that TCL Huaxing is chasing closely, winning the two production lines of CLP Panda will also help consolidate its technological and market advantages. In the announcement, BOE also stated that the acquisition of part of the equity of the Nanjing G8.5 and Chengdu G8.6 production lines is in line with BOE's development goal of becoming a global leader in the semiconductor display field, and can give full play to the company's comprehensive capabilities and experience in market, technology, and operations. Advantages, the downturn in the chemical industry is a development opportunity, perfect the company's technical reserves, enhance production and manufacturing capabilities, enrich the product portfolio, strengthen customer cooperation, expand the high-end product market, and continue to consolidate the industry's leading position.
Third, CLP Panda is an enterprise with a state-owned asset background, and its assets and equity sales are bound to be very cautious, while BOE is also a state-owned asset as a major shareholder. It is relatively easy to conduct asset transactions between the two, relative to the sale of assets to private capital. The dominant companies have lower risk.
Major General Ding, a Sankei observer, believes that BOE won the two production lines of CLP Panda 8.5/8.6, which has a richer portfolio of technology patents and can also widen the distance from competitors. Since the beginning of this year, TCL China Star and BOE have made large-scale counter-cyclical mergers and acquisitions. The two powerhouses have jointly promoted the accelerated adjustment of the global panel industry structure. The combined share of the two has exceeded 50%. An era where Chinese companies dominate LCD panels has arrived. Of course, we must also see that all kinds of new display technologies and industries are also developing rapidly. Technology, production capacity, economy, and sceneization are all necessary for China's display industry.
