If you have to make an inventory of major events in the LED industry in 2012, NVC Lighting will occupy at least two important seats. The first is the internal conflict caused by Wu Changjiang ’s departure last May, which made NVC both physically and mentally exhausted; secondly, at the end of the year Dehao Runda spent 1.65 billion yuan to acquire a 20.04% stake in NVC, co-starred with NVC "The marriage of giants".
Regarding the marriage between DHL and NVC, many insiders expressed their optimism. NVC has a mature brand and a complete marketing channel in the field of traditional lighting, as a leader in the domestic lighting industry. However, in the emerging LED lighting field, NVC continued to evolve its OEM development model in the early stage, with limited technology precipitation, especially in the upstream chip field. The lack of core technology has caused NVC's future competitiveness to be worrying. This marriage just paved the way for NVC's development.
In the past 3 years, DHL Runda spent 9 billion yuan to complete the complete industrial chain layout from LED epitaxial wafers to chips, from packaging to applications (lamps, display screens). Therefore, how to transform products and technology into commercial profits, and then build a global LED brand, has become the first question for DHL. This time through the acquisition of NVC, using NVC's mature brands and perfect marketing channels, DHL Runda may easily open a key channel to seize the LED lighting market.
Wu Changjiang claimed that the cooperation with DHL Runda has established a benchmark for industry integration and will lead the industry to gradually become standardized from the early stage of chaotic development. This marriage also marks a wave of consolidation in the LED industry under the reshuffle.
Upstream: horizontal integration and rapid expansion
In 2010, the shortage of upstream chips continued from the beginning of the year to the end of the year, making chip manufacturers profitable. A crazy investment around upstream chips began. However, in early 2011, the alarm on chip overcapacity had already sounded.
Li Bingjie, chairman of Chip Optoelectronics, believes that the mainland ’s subsidy for the LED industry will end. In 2015, there may be only 5 chip companies in the mainland. By the end of 2013, all the chip companies with MOCVD quantity below 10 will disappear. It is understood that mainland China has more than 60 chip companies, which means that more than 3/4 of the companies will be eliminated.
Large enterprises hope to expand their strength through mergers and acquisitions, and consolidate their leading position, while small and medium-sized enterprises hope to be preserved by mergers and acquisitions, which is especially obvious in the series of mergers and acquisitions of Taichang Jingdian.
On August 9, last year, Jingdian and Guangjia held a briefing. Guangjia and Jingdian became shareholdings of Jingdian through share conversion. 4.85 shares of Guangjia common stock were exchanged for 1 share of Jingdian, with a transaction value of NT $ 4 billion. Jingyong You Yongsheng said that the current production scale of Guangjia can only be achieved if Jingdian invests at least NT $ 8 billion, so it is a cost-effective transaction for Jingdian. Earlier, Jingdian merged Guolian Optoelectronics, Yuan Arsenic Optoelectronics and Lianyong Optoelectronics, which became the chip for Jingdian to dominate the chip field.
Guangjia Dai Zixiang said that after Guangjia was incorporated into Jingdian, it could use Jingdian's existing technology and sales platform, and use Jingdian as a foundry to reverse Guangjia's loss. At the same time, Jingdian is no longer burdened by reinvestment and can fully improve its operating performance.
In November of the same year, Sanan Optoelectronics announced that its wholly-owned subsidiary Xiamen Sanan Optoelectronics Technology plans to use self-raised funds of 506 million (RMB) to subscribe for 120 million private equity shares of Taiwan Canyuan Optoelectronics at a price of approximately 19.6 per share New Taiwan dollar. After the implementation of this plan, Sanan Optoelectronics will hold a 19.9% ​​stake in Canyuan Optoelectronics and become the largest shareholder of Canyuan Optoelectronics.
From the outside, Sanan Optoelectronics, as the current domestic LED epitaxial wafer and chip leader, has a large production capacity, second only to Taiwan Jingdian, and its products are concentrated in the low-end LED chip market. Canyuan is the second largest chip manufacturer in Taiwan. Its main markets are concentrated in the Asian markets such as Taiwan and South Korea. It has a good customer base in the high-end chip market. The combination of the two can complement each other.
According to Jian Fengren, chairman of Canyuan Optoelectronics, the capacity of Canyuan Optoelectronics is too small and the cost control ability is weak, while Sanan Optoelectronics has a large production capacity and low cost quotation. In cooperation with Sanan Optoelectronics, in addition to reducing costs, Canyuan can also use Sanan Optoelectronics to seize the mainland chip market.
For Sanan, with the increasing saturation of the low-end chip market and gross profit margins falling sharply, Sanan began to exert efforts in the research and development of high-end LED chip products. At the same time, the market of Sanan Optoelectronics is mainly limited to the country, and it is urgent to break the patent barriers and enter the overseas market. Canyuan Optoelectronics has more than 200 patents in LED chip technology, which is the ideal partner of Sanan Optoelectronics.
According to industry sources, the main driving force for integration and mergers among upstream chip companies is to expand production capacity and markets, obtain new technologies and own patents. Therefore, the items they choose to purchase are all companies with technology, patents or market advantages.
Midstream and downstream: vertical integration to seize the market
Since 2012, the excess capacity of LED chips and packaging has exhausted the entire industry. As a result, the focus of the industry began to tilt to the downstream lighting applications with more market potential, and LED lighting became a new round of investment hotspots.
In the first half of 2012, the overall scale of China's LED indoor lighting market showed a substantial increase, with a year-on-year increase of nearly 36%. At the same time, the number of newly added LED indoor lighting companies is nearly 1,000. It is estimated that in 2012, China's LED indoor lighting market is expected to exceed 25 billion yuan, a year-on-year growth rate of more than 40%.
At the beginning of last year, Ruifeng Optoelectronics, a well-known domestic LED packaging company, signed a cooperation agreement with NVC Lighting. They wanted to jointly establish a joint venture company to develop and manufacture LED packaging products for lighting. The company's LED devices are mainly supplied to NVC lighting.
Ruifeng Optoelectronics chooses to cooperate with NVC Lighting, which wins the pipeline. It is NVC's rich market pipeline resources that will open up the sea for Ruifeng Optoelectronics to enter downstream LED lighting applications. However, the project ended with Wu Changjiang's departure.
Later, NVC chose to marry Dehao Runda, which is more representative. Dehao Runda claims to have a complete industrial chain in the LED field, but it is understood that Dehao Runda's revenue in the LED field last year was less than 400 million yuan, of which 250 million yuan came from the previous M & A Ruituo display, excluding chips and packaging. The revenue of Dehao Runda ’s LED lighting is less than 50 million.
NVC has mature pipelines and brand influences. However, the field of upper and middle reaches of NVC mainly based on OEM is still blank. Some insiders have previously asserted that there will be no NVC shadow in the top ten LED lighting in the future, so NVC's move seems to be accidental and inevitable.
For traditional lighting companies at the crossroads of transformation, mergers and acquisitions have become an important way to quickly intervene in the LED field.
In May last year, 100% Lighting spent 40 million yuan to acquire an LED lighting company with a British background. Prior to this, Sunshine Lighting won a 50% stake in Hangzhou Hanguang Lighting at a price of 13.5 million yuan. He also held 30% of the equity of Japanese LIREN company at the price of RMB 1.2376 million, and obtained LIREN's advanced technology in the field of LED lighting.
M & A is easy to integrate
At present, the industry is in a post-shuffling era, and bankruptcies have occurred from time to time, including well-known enterprises such as Vision Optoelectronics, Haobo Optoelectronics, and Big Eye Optoelectronics, which have become the industry's "martyrs." The prerequisite for development is survival. As long as it is a company that wants to develop LED lighting, it hopes to use mergers and acquisitions to make up for its deficiencies in LED products, brands and pipelines.
Because they belong to different entrepreneurs, there were obvious differences in management, culture, and values ​​in the previous two companies. Therefore, people in the industry believe that although the transactions resulting from mergers and acquisitions can be immediate, however, the expected benefits still lie in the late run-in. Therefore, the enterprise can not pursue the success of the integration effect, but can only proceed step by step.
Just like the marriage between DHL and NVC, it seems to the outside world that although the two companies are both listed companies, they are strong. However, the performance of the two companies in the LED field was not satisfactory, and some people even ridiculed that the combination of the two is a "weak combination."
For NVC, how to rely on the advantages of Dehao Runda's upstream and midstream industry chain to quickly reduce costs and provide cost-effective products for its terminal marketing network, but this is a bit difficult for the low-end Dehao Runda products For DHL Runda, it hopes to use NVC's mature brands and channels to break its embarrassing situation of 9 billion yuan investment and sales of only 400 million yuan. However, NVC, which has just ended its internal battle, needs time to fully restore its pipeline advantages.
However, whether it is horizontal integration in the upstream or vertical integration in the midstream and downstream, both parties must first clarify their intentions and goals, patents? Talent? market? Then we can work better together and farther according to the expected goal.
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