FILE PHOTO – Security guards stand at the BYD booth at the Shanghai Auto Show, in Shanghai, China on April 19, 2023. REUTERS/Ali Song/File photo Obtain licensing rights
Aug. 28 (Reuters) – Chinese automaker BYD (002594.SZ) said on Monday its electronics unit has struck a deal with U.S.-based manufacturer Jabil Inc (JBL.N) to buy its portable electronics business in China for $15.8 billion. billion yuan. $2.2 billion).
The transaction will expand BYD Electronic (BE) (0285.HK) customer base, product portfolio and its smartphone component business as it looks to capitalize on Jabil’s potential growth in this sector.
Gabel Circuit, a Singapore-based manufacturer of printed circuit boards, set up a unit this month that absorbed its product manufacturing business in Chengdu and Wuxi, which will now be sold to the Chinese group.
Shares of BYD Electronic initially fell as much as 9% in Hong Kong on Monday but reversed losses and rose 0.5% by the afternoon, while the broader market rose 1.5%. Hong Kong-listed parent BYD shares rose 0.9%.
Although BYD is now best known for its electric vehicle business, it started out by selling electronic components. In 2007, BYD listed its BE unit on the Hong Kong Stock Exchange.
BE’s main business was selling electronic components for consumer electronic products such as smartphones and laptop computers. This was one of BYD Electronic’s three main business segments, accounting for more than 70% of its total revenue in 2022.
“For BYD, I think this is a reminder that they are doing more than just dominating electric vehicles,” said Tu Lu, founder of consulting firm Sino Auto Insights, adding that they were higher up in the mobile phone supply chain and were suppliers to Apple Inc. Apple.or).
Citi analysts said in a note that they believe the deal relates to Jabil’s Green Point metal casing operations in Wuxi, and that it could see greater penetration into Apple’s casing supply with higher market share.
It is likely that BE will finance the acquisition by issuing loans and shares, they added. BYD and BE did not disclose how they plan to finance the deal.
BE and Jabil did not immediately respond to requests for further comment.
“While improving BE’s market share of products, the acquisition will effectively synergize with BE’s existing products, enhance overall competitiveness, and ensure long-term sustainable development,” BYD said in an exchange filing, without disclosing any other details about the acquisition.
If the transaction is completed, the definitive agreement will enable Gabelle to “enhance its shareholder-focused capital framework, including additional share buybacks,” CEO Kenny Wilson said in a statement.
Wilson added that the deal would allow Jubail to continue investing in “electric vehicles, renewable energy, healthcare, AI cloud data centers, and other end markets.”
Jabil Circuit works with companies in healthcare, telecoms, computing and warehousing, with the goal of enhancing supply chain intelligence, according to its website.
BYD first entered the automobile industry in 2003 when it acquired Nanjing-based Qin Chuan automobile manufacturer, which obtained a license to manufacture automobiles. It launched its first model car three years later.
($1 = 7.2890 CNY)
(Reporting by Sameer Manikar in Bengaluru and Lin Mo in Beijing – Prepared by Mohamed for The Arabic Bulletin) Additional reporting by Brenda Goh in Shanghai. Editing by Stephen Coates
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