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Elitegroup fished by PC Chips

Acquisition in all but name

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Hong Kong’s giant PC Chips Group has merged with Elitegroup Computer Systems (ECS), as predicted yesterday in The Register. The financial details remain shadowy, but it looks like an acquisition in all but name. An Elitegroup company statement said that a merger took place on October 19, and Paul Chou, managing director of Elitegroup Computer Systems UK, confirmed that Johnson Yang, PC Chips’ chief, is now CEO and chairman of Elitegroup. He said: “Mr Yang started buying shares in Elitegroup and within three weeks he was the single largest shareholder. He was then appointed to the board of directors along with Mr Chen of Hsing Tech Enterprises [Hsing Tech Enterprise is PC Chips’ Taiwanese manufacturing facility.]” PC Chips is about four times the size of Elitegroup but Mr Chou insisted that the troubled Elitegroup will not be subsumed into PC Chips. James Hsu, Elitegroup’s vice chairman, said the entire Elitegroup board backed the merger, and he described it as, “the perfect marriage that will place us as the world’s number one mainboard manufacturer.” Johnson Yang commented: “PC Chips has unparalleled purchasing power and production efficiency superiority over its rivals [and] our merger brings together our strategic alliances with the major PC component and peripherals manufacturers.” It is PC Chips’ purchasing power that should help Elitegroup cut costs and get back into profit after its disastrous foray into the manufacture of CD-ROMs. PC Chips Group is the world’s biggest independent producer of motherboards with around a 10 per cent marketshare and the capability to produce over one million units per month. The combined output of PC Chips and the Elitegroup will be around 1.5 million units. PC Chips operates in the UK through its wholly-owned Protac distributorship and Mr Chou said that Protac and Elitegroup UK will not be merged into one operation. ®

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