TAIPEI, Jan 26 (Reuters) - Components maker Hon Hai Precision Inc has made its long-awaited entry into the booming solar technology business with the acquisition of a 36.77 percent stake of E-Ton Solar Tech for T$4.04 billion ($140 milion).
Hon Hai, via four investment arms and subsidiary CyberTan, acquired a total of 202 million shares in E-Ton for T$20 each, according to filings to the stock exchange late on Tuesday. The price represents a discount of 59 percent to E-Ton's closing price on the day.
The deal will allow Hon Hai to become one of the leading solar cell manufacturers in Taiwan, an industry that is growing thanks to global trends towards green energy.
Hon Hai's chairman, Terry Gou, has said previously he hopes the company will diversity into green energy sectors.
Taiwan's technology firms have been pushing into the fast-growing global solar energy market as they leverage their expertise in chip and LCD manufacturing and eye new growth prospects beyond maturing chip and panel businesses.
Chipmakers TSMC and UMC and LCD firm AU Optronics are among firms buying up smaller players or building solar cell plants in a strategy that also dovetails with the Taiwan government's initiative to develop green businesses.
Analysts expect 2011 would to be a better year for low-cost solar component manufacturers than for pure solar tech shares, partly due to declining government incentives for solar energy in the key European market.
E-Ton sold a total of 300 million shares in its private placement, raising T$6 billion. It said in a statement that it will use the proceeds to expand sales channels and buy machinery.
In Wednesday trading, E-Ton jumped as much as 6.9 percent, while Hon Hai rose about 0.4 percent.
CyberTan, which invested T$980 million for 8.92 percent of E-Ton Solar as its part of the deal, is a maker of broadband and wireless networking equipment. ($1=T$29.5) (Reporting by Clare Jim; Editing by Jonathan Standing)