Pantech to Merge With Pantech & Curitel
By Kim Yoo-chul
Staff Reporter
Pantech said Thursday that it will merge with its sister company Pantech & Curitel Communications on Dec. 30.
Pantech CEO and Vice Chairman Park Byeong-yeop said combining the two will help the medium-sized domestic group better compete with its bigger local and overseas rivals in the highly competitive mobile phone industry.
``The new entity will launch in December after the approval of our shareholders. Pantech will hold a general shareholders' meeting next month. No challenges and hurdles are seen ahead,'' Park said in a press conference held at Pantech's headquarters in Sangam-dong, northern Seoul.
For every share owned in Pantech & Curitel, shareholders will receive 1.312 shares in the new entity, the group said in a regulatory filing.
After the acquisition, the capitalization of Pantech will grow to 824.3 billion won, while the total number of shares will rise to 1.649 billion from 765 million.
With a greater corporate size, South Korea's third-largest mobile phone manufacturer is aiming to reap 5 trillion won or some $4.3 billion in total sales in 2013, up from an estimated 2.2 trillion won this year.
``The merged unit will sell 25 million mobile phones in 2013 globally. The ambitious target is achievable as Pantech will steadily introduce market-leading products in developed markets via solid strategic partnerships on a region-by-region basis,'' said Park.
In 2010, the group has set a 3-trillion-won in sales goal through the offloading of 13.5 million handsets. In 2011, Pantech plans to reap 4 trillion won in total sales from 19.8 million handsets; and in 2012, 4.5 trillion won, from 22 million phones, Park told reporters.
The merger plan and sales target comes after Pantech announced a ninth consecutive quarter in the black, since the third quarter of 2007. During the July-September period, Pantech made 41.8 billion won in operating profits from 555.7 billion won in sales, including the performance of Pantech & Curitel.
``As of the end of the third quarter, accumulated operating profits were 130.8 billion won. The merger decision could be interpreted that we are near to recovering corporate size before entering a debt rescheduling program,'' the vice chairman said, adding that the financial soundness of the group has been strengthened.
In September, mobile technology provider InterDigital agreed to grant Pantech a worldwide, non-transferable, non-exclusive, royalty-bearing license covering Pantech under 2G, 3G, LTE, WiMax, WiBro and certain other current and developing 3G-based standards.
In August, creditors of the ailing local handset maker have agreed to convert debts worth 220 billion won or $176.7 million into equity.
Meanwhile, U.S.-based chip giant Qualcomm agreed to take a 15-percent stake in Pantech after agreeing to absorb more than $76 million in debt to help it expand its market share.
Since 2007, Pantech and its affiliate have been under a debt rescheduling program after they were rescued by the state-run Korea Development Bank-led creditors with 1.28 trillion won.
The company produces multiple mid-level cell phones and feature phones for the likes of AT&T and Verizon Wireless.
Pantech said it will soon also launch smart phones for the two largest mobile operators in the United States, as well as messaging phones.
``Now is the time for Pantech to put more focus on products. Bigger size doesn't guarantee success in the global market. The global share of Pantech remains around 1 percent,'' a high-ranking executive in the telecom industry said.
Pantech officials say the group is planning to introduce phones in Europe and China. Pantech is conducting its international business mainly in Japan and China. But its presence is not threatening enough to compete with bigger vendors.