Suspicious Intent
There is growing controversy over a Japanese company's plan to buy KJ Pretech. Japanese firms are eying the field of mechanical components for smartphones, as well as other sectors like the retailing, banking, and securities industries.
According to sources in the securities industry on July 22, Minebea, a Japanese firm specializing in miniature ball bearings, will buy 120,000 shares of KJ Pretech by purchasing preemptive rights of KJ Pretech worth 1.5 billion won (US$1.4 million) owned by KB Investment. An industry source said, “Minebea and KB Investment already reached an agreement, which is expected to be announced soon.”
Last year, the Japanese firm bought an 8.86 percent stake in KJ Pretech (154,000 shares). If Minebea secures an additional 120,000 shares, it will have a 15 percent stake (274, 000 shares), and become the largest shareholder of KJ Pretech. Minebea is reportedly proceeding with a plan to increase its share numbers up to 460,000.
KJ Pretech is the fourth-largest manufacturer of backlight units (BLU) for smartphones, and recorded 120 billion won (US$116 million) in sales last year. Minebea's attempt to acquire KJ Pretech is raising questions about whether or not essential areas will be given to Japanese enterprises in the future.
Minebea is the largest or the second-largest BLU maker, and KJ Pretech's rival company in the market for mobile phone components. If the Japanese firm nurtures its Korean competitor and creates synergy, it will be good news for the market.
However, the reality is that it causes concerns rather than expectations. In March 2012, Minebea acquired Moatech, which mainly produces stepping motors. Moatech's net profit in 2011 reached 3.1 billion won (US$3.0 million), but operated at a loss after it was sold to Minebea. The Korean firm posted an operating loss of 4.2 billion won (US$4.0 million) in 2012 and 11.2 billion won (US$10.9 million) in 2013. Over the same period, Moatech's market share reportedly shrank, while Minebea's share grew.