Taiwanese Apple supplier battles activists over $4bn cash pile

A Taiwan-based Apple supplier is battling an international investor for its multibillion-dollar cash pile, in a case that signals growing shareholder activity on the ground.

Catcher Technology, a China-made maker of electronic housings for Apple devices, is being challenged by Hong Kong-based investment firm Argyle Street Management to improve its governance and return some of its $4.2 billion in net cash to shareholders, according to people familiar with the discussions.

Argyle owns about 1% of Catcher and is one of its several foreign institutional shareholders alongside Franklin Templeton, Singapore’s GIC and Cathay Life Insurance. She reached out to Kutcher executives about her concerns at the Taiwan meeting, one of the people said.

Shareholder activism has grown more slowly in Asia than in the U.S. because of the dominance of family-controlled firms, but recent high-profile battles, including in Hong Kong Above HSBC And the Bank of East Asia, and in Japan on Toshiba, raised its profile.

Global investor appetite for Taiwan has grown in recent years, with foreign direct investment rising 275 percent to a 15-year high of $8 billion in the first half of 2022, thanks to the country’s large industrial base and its status as a gateway to China.

However, the tech-dependent stock market was hit by a sell-off in global funds and fears of a US recession.

Argyle accused Catcher’s management of “hoarding cash” and using it to prop up a “bloated” management structure, according to two people with knowledge of the situation. The company has a market value of about 4 billion dollars on the Taiwan Stock Exchange and is managed by three brothers of the Hang family who sit on its board of directors.

In 2020, Catcher sold two units of its Chinese division that supplied Apple iPhone cases for $1.43 billion to a smaller competitor, Lens Technology, based in Hunan province. The sale of one of its main revenue generators came as Chinese companies sought new opportunities to access Apple’s coveted supply chain in the wake of the China-US trade war.

Argyle claims that despite the exercise, Catcher has paid a “low” dividend of NT$10-NT$12 per share over the past five years, amounting to NT$42.95 billion ($1.43 billion) and said it would maintain that dividend level going forward. three years.

About 15% of the shares in the Tainan-based company are owned by the Hong family, including its chairman Alan Hong, and about 43% are owned by foreign institutions.

Kutcher said it is “currently in a phase of business transformation” and is diversifying into fields including auto parts manufacturing and medical technology.

“The cash position we have retained is mainly for investment opportunities,” the company said. “We pay at least 50% of the profits as cash dividends. The cash dividends we have paid every year for the last five years are, literally, equal to our paid-in capital, actually above the market average.”

In July, prosecutors in Taiwan charged 14 people, including members of Catcher’s research and development team, with breach of trust and taking trade secrets for use overseas. Kutcher said in a statement at the time that she was “cooperating with the investigation and following legal proceedings and rulings.”

Taiwan has stepped up efforts in recent years to prevent the leakage of sensitive technologies, such as semiconductors, to the mainland. In 2021, Taipei moved to restrict local technology companies from selling assets or subsidiaries to Chinese companies.

Taiwanese Apple supplier battles activists over $4bn cash pile Source link Taiwanese Apple supplier battles activists over $4bn cash pile

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