Prime View raises $165 million from upsized GDR

Prime View International, the world's leading manufacturer of electronic paper (ePaper) display modules, has raised NT$5.32 billion ($165 million) from the sale of global depositary receipts. The money will help fund its $215 million acquisition of US-based E Ink Corporation, which was announced in June and is scheduled to be completed before the end of this year.

Taiwan-based PVI has had a partnership with E Ink, a leader within electrophoretic ink technology, since 2005 to provide displays for electronic books. Together the two companies support nearly 20 eBook manufacturers worldwide, making them the undisputed leaders in this industry. Their products include the popular Sony Reader and Amazon's Kindle 2 and Kindle DX. The acquisition will create a single public company dedicated to electronic paper, which refers to a flexible display technology designed to mimic the appearance of ordinary ink on paper. Unlike a conventional flat panel display, e-paper doesn't require a backlight as it reflects light like ordinary paper. It also works in direct sunlight.

"The world is searching for green technology that saves energy and cuts waste and still provides an outstanding experience," PVI's chairman and CEO, Scott Liu, said when announcing the E Ink acquisition. "E Ink's electronic paper meets those needs, especially in electronic publishing and mobile displays."

According to iSuppli analyst Vinita Jakhanwal, the global market for electronic book devices is expected to grow from 1.1 million units in 2008 to 20 million units in 2012.

PVI's production has gone from about 20,000 units a couple of years ago to about 3 million units last year and is expected to increase further to between 6.6 million and 8 million units by the end of 2010.

The GDR acted as a re-IPO of sorts for E Ink and may explain the strong interest in the deal. According to a source, the offering was more than three times covered, which allowed it to be upsized to 7 million GDRs from the initial size of 6 million. At launch, the company had flagged that the deal could be upsized to 8 million GDRs, but in the end it chose to exercise only half of that option in light of the fact that a lot of its shareholders were quite sensitive to dilution.

The 7 million GDRs that were sold equal 70 million common shares and account for 7.5% of the enlarged share capital. They were price at $23.5732 apiece, which translates into NT$76 per common share, and a tight 3.6% discount versus PVI's closing price in Taiwan on Wednesday.  

The deal was priced early Thursday following a one-week roadshow during which the share price fell close to 5%.

The order book included a lot of high-quality investors and about 70% of the demand was estimated to have come from long-only investors. Perhaps because of the relationship with E Ink, US investors were bigger participants than on the average Asian GDR and the demand was said to have been fairly evenly divided between Asia, Europe and the US. About 45-50 investors came into the deal.

Credit Suisse was the sole bookrunner for the deal, having earlier also acted as the financial adviser to PVI on the E Ink acquisition.