June 30, 2014 / 3:04 AM / 6 years ago

Hon Hai buys a stake in SK C&C; shares hit multi-year highs

TAIPEI (Reuters) - Hon Hai Precision, the world’s biggest electronics component maker, said on Monday it had bought a 4.9 percent stake in South Korean IT services firm SK C&C for 381 billion won ($376.59 million).

The logo of Foxconn, the trading name of Hon Hai Precision Industry, is seen on top of the company's headquarters in Tucheng, New Taipei city, December 24, 2013. REUTERS/Pichi Chuang

The move marks Hon Hai’s second merger in less than two months as part of a broader effort to diversify away from the contract manufacturing business.

Hon Hai, the major supplier of iPhones and iPads, paid 155,500 won per share for the stake, which was for “long-term investment”, according to a company statement. It did not elaborate.

SK C&C said in a separate regulatory filing that Chey Tae-won, the chairman of SK Holdings and biggest shareholder of SK C&C, was the seller.

This knocks down Chey’s stake from 38 percent to 33.1 percent in SK C&C, through which he controls SK Holdings and other units including the world’s second-biggest chipmaker, SK Hynix Inc.

“Hon Hai is considering expanding its business portfolio into information communication technology-centered services, and the fact that they chose SK C&C as their partner is positive,” an SK Group spokeswoman said.

She declined to comment on Chey’s plans for the proceeds as it was a personal matter.

Hon Hai’s parent company, Foxconn Technology Group, said late in May it would buy a stake in Taiwanese mobile telecoms operator Asia Pacific Telecom for T$11.6 billion ($390 million) in a deal that would expand its presence in Taiwan’s fledgling 4G telecoms market.

The news helped send Hon Hai stocks up 1.4 percent to T$100 about one hour into Taipei trading, a multi-year highest intraday level. The main index jumped 0.8 percent.

Shares in SK C&C rose as much as 4.8 percent after the filing, beating a 0.4 percent rise in the wider market.

Editing by Stephen Coates

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