Apple supplier Foxconn is to 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.
Foxconn would pay T$20 a share for 582.9 million shares in Asia Pacific via a private placement, both companies said in stock exchange filings on Tuesday.
Asia Pacific and a unit of Foxconn are then expected to merge fully via a share swap, pending agreement on terms, by 20 June.
The deal comes as Foxconn, the world's largest contract manufacturer of electronic goods, is branching out into new areas including software and cloud computing, in addition to 4G services.
Foxconn has previously won one of the licenses to operate part of Taiwan's 4G spectrum, which is expected to begin service later this year.
"The deal should definitely benefit Hon Hai as they move into 4G, though it could be as long as seven years before they see any real profit from their entry into the field," said Fubon Securities analyst Arthur Liao.
Earlier this month, Asia Pacific had said it would soon decide soon on a merger with either Foxconn or Chinese noodles maker Ting Hsin International.
Foxconn will purchase Asia Pacific under its subsidiary company Ambit Microsystems, the unit responsible for its future 4G deployment, the stock exchange statement said. Ambit will be dissolved and new company will operate under the name Asia Pacific Telecom.
