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China PC seller Founder rises on acquisition talk
2006-12-19
SHANGHAI - Shares in China's No. 2 PC seller Founder Technology rallied nearly 5 percent on Wednesday on market talk that appliance-making giant Haier Group was seeking to buy into the company, analysts said. Founder's Shanghai-listed shares gained as much as 0.20 yuan to 4.39 yuan ($0.552), in active trade following a 10 percent surge the previous session. "Founder's strong performance was caused by the rumour that Haier would buy into the company," said Zheng Weigang, analyst at Shanghai Securities. The China Securities Journal, citing analysts, said there was talk that Haier wanted to buy 10 percent in Founder for about $50 million or 4.12 yuan a share, though executives at both firms have denied that. The newspaper also said Founder's planned rights issue of 291.13 million shares at 2.66 yuan each, announced on Tuesday, might be aimed at deterring the Haier Group from buying a stake. Proceeds will be invested in its printed-circuit-board (PCB) business. Officials at Founder were not available for comment. An official at Haier in the eastern port city of Qingdao said she could not provide immediate comment. Analysts say Haier, which makes a wide range of appliances from TVs to stereos, has been seeking to boost its PC business in China. Hong Kong-listed Lenovo is China's largest PC producer, commanding more than a third of the domestic market, the world's largest after the United States. Lenovo became the world's third-largest PC maker following its US$1.25 billion purchase of IBM's PC arm in 2005. The company now vies with bigger rivals Dell Inc. and Hewlett-Packard Co. globally. Founder sold 2.5 million PCs in 2005, accounting for about 12 percent of the Chinese market. Founder Technology said in June that it aimed to boost its sales by up to 60 percent to four million PCs this year, well outpacing expected growth for the broader overall market. Chinese media had previously reported that Dell was considering buying Founder's PC-making unit. A Dell spokesman in Texas declined comment. "The red-hot competition in China's PC market will definitely lead to further industry consolidation," Shanghai Securities' Zheng said. ($1=7.822 Yuan)
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