BenQ to spin off BenQ, change name
BenQ Corp. plans to spin off its brand name business, BenQ, and change its corporate identity, it said on Wednesday.
The move comes seven months after BenQ announced it would stop investing in German handset subsidiary BenQ Mobile GmbH & Co. OHG.
Since then, BenQ Mobile has filed for bankruptcy and laid off thousands of employees in Germany, some of whom have been shown on TV picketing against the Taiwanese parent and the former owner of the mobile phone unit, Siemens AG. BenQ has said it lost over $1 billion in the attempt to turn BenQ Mobile into a profitable business.
An official English translation of BenQ's new name has not yet been decided, but it is being called Jia Da Corporation until one is found. Jia Da will focus exclusively on contract manufacturing, and will control 100 percent of the spin-off. The name BenQ Corp. will go to the spun-off unit, which will continue to focus on brand name products such as mobile phones, digital projectors, computer monitors and LCD (liquid crystal display) TVs.
The reason why BenQ Corp. opted to spin off the branded business is that the manufacturing business is larger, a company representative said. The branded business accounts for around 30 percent to 40 percent of revenue. It made sense for the larger of the two to become the controlling entity, and keep the name BenQ with the branded business, she added.
BenQ shareholders will have to approve the spin-off plan, which will move forward on Sept. 1, 2007, if the proposal wins approval. The current chairman and president of BenQ will hold the same titles in Jia Da after the spin-off.
BenQ has faced a series of troubles after its attempt to turn BenQ Mobile into a global contender in the handset business failed. On top of financial losses, executives at the company are under investigation in Taiwan on allegations of insider stock trading related to when it revealed losses incurred from BenQ Mobile.
The chairman of BenQ, K.Y. Lee, and president, Sheaffer Lee, have both been indicted by Taiwanese prosecutors, and earlier this month were released on bail of NT$15 million ($452,000) and NT$10 million, respectively.
The company's chief financial officer, Eric Yu, remains in custody.
The Taoyuan District Prosecutor's Office alleges that shares of BenQ stock were sold off ahead of announcing a loss in the first quarter of last year, caused by troubles related to its takeover of BenQ Mobile a year earlier. BenQ's share price plunged after the announcement.
In 2005, Siemens AG paid BenQ over €250 million ($339.6 million) to take the ailing division off its hands, and BenQ soon set it up as a subsidiary company, BenQ Mobile. But stiff competition in the mobile phone industry hurt the company's efforts to build a new brand, and after racking up losses of over €840 million, BenQ finally called it quits.
The Taiwanese company said it would stop investing in the company, which quickly filed for bankruptcy protection. The turn of events and loss of nearly 3,000 jobs caused a public outcry in Germany.
In February, the insolvency administrator working on the BenQ Mobile case announced the company would be split up and sold after attempts to find a buyer had failed.