As part of its strategy to seize Jabil’s potential market expansion, BYD Electronic (BE) will increase its client base, product portfolio, and smartphone component business through the transaction.
Jabil Circuit, a printed circuit board manufacturer located in Singapore, established a unit this month that merged its product production operations in Chengdu and Wuxi. These operations will now be sold to the Chinese conglomerate.
In Hong Kong, shares of BYD Electronic originally declined by as much as 9%, but they later recovered their losses and concluded flat, while the overall market closed 1% higher. The parent company’s Hong Kong-listed shares, BYD, finished 0.7% higher.
BYD initially sold electronic components but is today well recognised for its electric vehicle industry. It floated its BE division on the Hong Kong Stock Exchange in 2007.
Selling electronic components for consumer electronics items like laptops and smartphones has been BE’s main line of business. This was one of BYD Electronic’s three main business sectors, accounting for more over 70% of its overall sales in 2022.
According to Tu Le, the founder of consultancy Sino Auto Insights, “For BYD, I think it’s a reminder that they do more than just dominate in EVs,” adding that they were farther up the mobile supply chain and a supplier to Apple Inc.
In a note, Citi analysts stated that they thought the agreement encompassed Jabil’s Green Point metal casing facilities in Wuxi and that BE may further penetrate the Apple casing market with a larger market share as a result.
They went on to say that BE would probably have to issue loans and equity to pay for the acquisition.
How BYD and BE intended to finance the transaction was kept a secret.
Requests for more information about BE and Jabil did not immediately receive a response.
Without providing any other information regarding the acquisition, BYD stated in an exchange filing that “while increasing BE’s market share of products, the acquisition will effectively synergize with BE’s existing products, enhance overall competitiveness, and ensure long-term sustainable development.”
The definitive agreement would allow Jabil to “enhance our shareholder-centric capital framework, including incremental share buybacks”, according to a statement from Chief Executive Kenny Wilson. If the transaction goes through.
The agreement will enable Jabil to make additional investments in “electric vehicles, renewable energy, healthcare, AI cloud data centres, and other end-markets,” Wilson noted.
According to its website, Jabil Circuit collaborates with businesses in the healthcare, telecommunications, computer, and storage sectors with the goal of advancing supply-chain intelligence.
BYD made its debut in the auto sector in 2003 when it bought Nanjing-based carmaker Qin Chuan, which had a licence to build cars.