LED firms Lextar Electronics Corp and Wellypower Optronics Co Ltd, both of Hsinchu Science Park, Taiwan, have agreed to merge, targeting 1 February 2013 for Wellypower to be absorbed into Lextar. The merged entity will operate as Lexstar.

The share swap ratio for Wellypower and Lextar is planned to be 2:1, based on the stocks’ market value, net worth, industry status and prospects, production capacity and profits, and subject to be approved by the shareholders meeting of both companies.

Founded in May 2008, Lextar is a subsidiary of Taiwan’s display panel maker AU Optronics (AUO) specializing in manufacturing high-brightness LED epiwafers, chips and packages, as well as energy-saving and smart lighting products. Applications includes LCD backlighting, professional lighting source, consumer lighting source and various lighting products. After acquiring LightHouse Technology Inc in March 2010, Lextar now has more than 2500 staff at manufacturing plants in the Hsinchu Science Park, Hukou Industrial Park and Chunan Science Park in Taiwan, and an assembly plant in Suzhou, China. Revenue grew from US$255m in 2010 to US$309m in 2011.

“Lextar is one of the top three LED companies in Taiwan and is the only one throughout the island to have a vertically integrated business model,” says the firm’s chairman Dr David Su.

With a factory in Zhunan, Mao-Li County, Taiwan as well as Hsinchu, Wellypower has experience in LED packaging as well as in lighting product manufacturing and sales. “To accommodate international energy-conservation trends, Wellypower believes it will obtain technological and management resources after the merger, which will be beneficial in quickening the company’s transformation into an LED firm,” says the firm’s chairman Allen Huang. “The merger will also increase the company’s competitiveness,” he adds.

Lextar reckons that merging with Wellypower will provide advantages in the sales and supply chain segments, providing a high degree of integrated operations. The merger should reduce duplicate investment and enhance the economies of scale of production and procurement, while also expanding sales channels abroad. Additionally, Wellypower is one of the largest T5 tube providers for China Electric MFG Corp, which has its own lighting brand TOA. So, Lextar reckons it should gain a more developed relationship with China Electric and be able to enhance mutual competitiveness in the LED lighting market.

“Lextar has resource management, production and supply chain experience together with company merging back in 2010, when it merged with the largest LED backlighting maker at the time, Lighthouse,” says Su. “Lextar’s merger with Wellypower this time around will provide the two sides more talent and resources, and will increase Lextar’s advantages in the ever-quickening and evolving LED lighting market,” he reckons.