TCL Communication Acquires Alcatel's Stake in Joint Venture

Strategic Insights -

TCL Communication Technology Holdings Ltd, a Hong Kong-listed mobile phone maker, has announced its plan to purchase Alcatel's 45% stake in their joint venture, TCL & Alcatel Mobile Phones Ltd. Established in September last year, the joint venture aimed to integrate the businesses of the two companies. The acquisition will see TCL Communication issue new shares worth HK$63.3 million to cover the purchase price, which will enlarge its current share base by 5%. The deal is pending approval, and shares of TCL Communications dropped by 7.77% to close at HK$0.415 yesterday. Analysts believe the departure of Alcatel indicates the partnership is not working well, but the purchase is seen as a crucial step for TCL Communication to prosper and grow in the future.

Key Takeaways:

  • TCL Communication will acquire Alcatel's 45% stake in TCL & Alcatel Mobile Phones Ltd, expanding its share base by 5% with new shares worth HK$63.3 million (US$8.12 million).
  • The joint venture made a net loss of HK$357 million yuan (US$45.7 million) in the first quarter of the year.
  • TCL Communication posted a net loss of HK$386 million (US$49.4 million) in the same period.
  • The partnership between TCL and Alcatel is not working well, with TCL Communication chairman Li Dongsheng stating that the purchase is a critical step forward.
  • Alcatel will pay TCL Communication 20 million euros (US$26 million) for the acquisition.
  • TCL Communication plans to issue 20 million euros (US$26 million) worth of convertible notes to its parent to fuel the development of the joint venture.

Statistics:

  • TCL Communication will issue new shares worth HK$63.3 million (HK$8.12 million) to cover the acquisition.
  • The partnership between TCL and Alcatel will see TCL Communication become the sole owner of the joint venture.
  • The joint venture made a net loss of HK$357 million yuan (US$45.7 million) in the first quarter of the year.
  • TCL Communication posted a net loss of HK$386 million (US$49.4 million) in the same period.
  • TCL Communication shares dropped by 7.77% to close at HK$0.415 yesterday.

Sources:

  • "TCL to acquire Alcatel's stake in joint venture," Asia Pulse, May 18.
  • "TCL Communication posts HK$386 million loss," China Securities, May 18.
  • "Alcatel pays TCL 20 million euros for joint venture stake," XIC, May 18.