iPhone assembler, Pegatron, to purchase iPad chassis manufacturer Casetek

0
853
Apple asks supply chain to move

iPhone assembler Pegatron Corp. recently announced plans to acquire iPad chassis maker Casetek Holdings for $492.84 million. The two firms expect the transaction to close by February 2021. The purchasing company said it is making the deal to become more competitive in the global marketplace.

In particular, Pegatron likely initiated the merger to lock down more of Apple’s business.

Details of Pegatron’s Buyout of Casetek

DigiTimes reports Pegatron owned almost 60 percent of Casetek, but legal restrictions previously kept the brands from pooling materials and personnel. Once the merger goes through, the iPhone manufacturer will have full access to its former affiliate’s resources. Under the terms of the deal, Pegatron’s Pegasus Ace Limited subsidiary will assume full control of the chassis fabricator.

The Apple supplier said it wants to broaden its market appeal by adding new technologies and offering to its portfolio.

The chassis maker’s stakeholders will hold a meeting on September 30, 2020, to discuss the merger plan. If approved, the deal will see Pegatron absorb its fellow Taiwanese manufacturer, and Casetek will delist from the local stock exchange.

Why Pegatron is Buying Casetek

Although Pegatron did not mention Apple in its press release, it is likely buying Casetek to deepen its relationship with the Big Tech firm.

Bloomberg notes Pegatron’s recent activity has been motivated by the expansion of rival Luxshare Precision Industry Co. In July, Luxshare spent a reported $472 million to acquire Wistron various assets, including its Chinese-based iPhone factory. As a result, the firm joined Foxconn, Pegatron, and Wistron on the list of the world’s only iPhone assemblers. As China is the world’s largest smartphone market, Apple could assign the company large production orders to keep domestic consumers satisfied in the future.

Around the same time that Luxshare made its play, Pegatron also made a major Apple-related production capacity expansion last month. The firm announced it is investing $1 billion to establish a second iPhone manufacturing complex in India. Market analyst Matthew Kanterman said the company made the capital expenditure to control more of the iPhone SE manufacturing segment.

Although Apple does not rely on Casetek to make its iPhone cases, the firm does supply the American company with iPad and iMac enclosures. As Pegatron is buying itself a bigger piece of the Apple supply chain, it will definitely receive a revenue boost. The one-two punch of the manufacturing expansion and merger could increase its standing with Apple.

However, Pegatron’s ability to outpace its rivals long-term remains an open question.

LEAVE A REPLY

Please enter your comment!
Please enter your name here