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Shares of Visionox Technology jumped to the daily trading limit following the announcement that the Hefei municipal government’s investment arm will take control of the company. The Chinese display panel manufacturer, which has faced financial difficulties, saw its stock close 10% higher at CNY9.32 (USD1.31) in Shenzhen, after trading was halted on November 3 in anticipation of the takeover.
The company revealed that it will issue approximately 419 million new shares at CNY7.01 each to Hefei Jianshu Investment in a private placement valued at over CNY2.9 billion (USD412 million). The share price represents about a 16% discount compared to its closing price of CNY8.33 on October 31. Upon completion of the transaction, Hefei Jianshu Investment’s ownership stake will increase from 11.5% to 31.9%, making it the largest shareholder. The actual controller will be the People’s Government of Shushan district in Hefei.
The funds raised from this private placement are intended to bolster working capital and pay off existing debts. Hefei is a significant hub for Visionox’s manufacturing activities. The company currently operates two six-generation active matrix OLED production lines in the city and is constructing an 8.6-generation AMOLED line, designed to produce 32,000 units annually with a total investment of CNY55 billion (USD7.7 billion).
Despite these expansions, Visionox has struggled financially over the years, reporting a net loss of CNY1.6 billion in the first three quarters of this year. Its asset-to-liability ratio increased sharply to 84.4% as of September 30, from 49.4% at the end of 2020, reflecting deteriorating asset quality.
In the first half of this year, the company held a 9.1% share of the global smartphone OLED panel market, ranking fifth behind Samsung Electronics, BOE Technology Group, Tianma Microelectronics, and TCL China Star Optoelectronics, according to data from Sigmaintell. A year earlier, its market share was 10.3%, and it ranked third.
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