"Picking up a big bargain" Wingtech Technology acquires OFILM's Apple camera business for 2.42 billion

 On March 29, Wingtech Technology issued an announcement, announcing that it had reached an agreement with OFILM on the acquisition of specific customer camera business. Wingtech Technology will complete the acquisition of OFILM's specific customer camera business for 2.42 billion yuan, which is almost 40% off the pricing principle of the previous "Acquisition Intent Agreement".

The announcement disclosed that Wingtech Technology signed the "Equity Purchase Agreement on Guangzhou Delta Imaging Technology Co., Ltd." with OFILM, and the "Asset Purchase Agreement on Jiangxi Jingrun Optics Co., Ltd." with OFILM and Jiangxi Jingrun Optics Co., Ltd. The company intends to purchase 100% of the equity of Guangzhou Delta Imaging Technology Co., Ltd. held by OFILM and the equipment related to the supply of cameras to specific overseas customers owned by Jiangxi Jingrun Optics Co., Ltd. in cash. The transaction price of 100% equity of Guangzhou Delta is based on the appraisal value and is determined to be 1.7 billion yuan after negotiation; the transaction price of the target equipment owned by Jiangxi Jingrun is based on the appraisal value and is determined to be 720 million yuan (tax included) after negotiation, and the total transaction price is 2.42 billion yuan.

According to the disclosure, the transaction price of 2.42 billion yuan includes 100% equity of Guangzhou Delta (front photo) + Jiangxi Jingrun specific customer equipment (back photo). After the actual controller is changed, the obstacles to cooperation with overseas specific customers will be eliminated. It is reasonably estimated that the time to resume obtaining orders from overseas specific customers is within 4 months after the completion of the equity delivery!

In fact, in the "Acquisition Intent Agreement" released on March 7, the initial acquisition price was 10*A+B, A=2020 audited net profit of Guangzhou Delta Imaging Technology Co., Ltd., and B=the transaction price of operating assets. The total price is estimated to be about 6 billion yuan.

Guangzhou Delta is the former production base of Sony (China) Co., Ltd. in South China (Guangzhou, China), and its main business is the production and sales of micro cameras and related components. Sony's South China production base was acquired by OFILM in 2017 and the transaction was completed. It has the industry's top camera module development and packaging technology, and has the qualifications and capabilities to supply to the world's top smartphone brand customers. OFILM entered Apple's supplier list and became its main camera supplier precisely because of the acquisition of Sony's South China production base.

On March 16, OFILM disclosed the "Announcement on Major Changes in the Business of a Specific Customer" (Announcement No.: 2021-026), stating that a specific overseas customer plans to terminate its procurement relationship with OFILM and its subsidiaries, and OFILM will no longer obtain existing business orders from the specific customer in the future.

On March 24, Wingtech Technology released an announcement on the progress of the acquisition, disclosing that after learning that a specific overseas customer planned to terminate its procurement relationship with OFILM and its subsidiaries, it immediately evaluated the impact of the termination of the specific overseas customer's order on the target assets, and maintained continuous communication and consultation with OFILM and the specific overseas customer.

The announcement of the final acquisition price indicates that Wingtech Technology, OFILM and specific overseas customers have reached a consensus on the transaction.

Since the news that OFILM will divest its Apple-related business units came out, there have been rumors that BYD, Luxshare Precision, Lens Technology, Lingyi Intelligent Manufacturing and other companies are interested in bidding. The release of the announcement by both parties also means that Wingtech Technology finally "picked up a big bargain" for this high-quality asset.

Li Gang, an electronics analyst at Sino, a Chinese market research organization, said that cameras are the main future technology direction for mobile phones, IoT, smart cars and other fields. Technological innovations such as high-end cameras, dual cameras and triple cameras bring huge and growing industrial opportunities. OFILM's camera business is also the most core and valuable part of Apple's Chinese industrial chain. Its scarcity and importance are self-evident. It can be said to be the jewel in the crown of the entire Apple Chinese industrial chain. It takes at least 2 years to become an Apple supplier. This time, Wingtech Technology's large-scale acquisition of all OFILM's Apple business assets shows that Wingtech Technology has already obtained Apple's supplier qualification and is about to become one of Apple's main suppliers with the help of the newly added camera business.

Li Gang believes that Wingtech Technology's acquisition of OFILM's camera business marks that Wingtech has opened up a new track in optics on the basis of its original two major business areas of semiconductor IDM and communication product integration, further broadening its business scope and forming a complete industrial chain from chip design, wafer manufacturing, packaging and testing to optical devices (cameras), mobile phones, tablets, laptops, IoT, automotive electronics and other product research and development and manufacturing.

According to Wingtech Technology's announcement, the target asset has a professional and efficient technical R&D team and is an important supplier of camera modules for specific overseas customers. After the completion of this transaction, the company will further expand its business scope, cooperate with specific customers in the field of camera module products, and form a complete industrial chain, so as to better seize the development opportunities of the rapid growth of demand in the fields of 5G, IoT, and smart electric vehicles, and promote the long-term sustainable growth of the company's performance.