Hon Hai buys digital camera maker for US$930 million

Hon Hai agreed to buy digital camera maker Premier Image for about $930 million in order to expand its product offerings.

The world's largest contract electronics manufacturer has agreed to buy digital camera maker, Premier Image Technology, to expand its product offerings to cameras, projectors and other optical gear.

Taiwan's Hon Hai Precision Industry, which produces tech gadgets ranging from Sony's PlayStation 2 game consoles to Nokia mobile phones and Apple Computer's iPods, will pay around $US930 million for Premier Image in an all-stock transaction. The companies agreed to swap one share of Hon Hai stock for every 3.9 shares of Premier stock, they announced in statements to the Taiwan Stock Exchange.

The deal will boost Hon Hai's ability to produce optical-related devices for clients. The company already makes a wide range of PCs, components, networking gear, and consumer electronics. It had been lagging in digital cameras and projectors until the deal with Premier, one of Taiwan's top producers of digital still cameras.

Premier is also a supplier for Sony, which is a major customer of Hon Hai's, giving the company another leg up in its dealings with the Japanese electronics giant. The relationship between Sony and Hon Hai has grown so tight in recent years that Hon Hai built a PlayStation laboratory in Taiwan to facilitate development of components and manufacturing processes for the game consoles.

The deal is expected to be finalised in December.

An analyst at Goldman Sachs (Asia), Henry King, was upbeat about the deal in a note to clients. He said the fact the two companies make products on behalf of Sony gives the deal synergy, while adding optical components and digital cameras will expand Hon Hai's product range.

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Dan Nystedt

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