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The company said the acquisition is expected to enhance its market share and foster synergy with its existing products, ultimately boosting its overall competitiveness.
BYD Electronics, the electronics division of the Chinese automaker BYD, has reached a deal with the US company Jabil Inc to purchase its manufacturing business in China. According to an announcement on Monday, the company is set to acquire Jabil’s business for 15.8 billion yuan at approximately $2.2 billion.
Through this acquisition, BYD Electronics will take over the company’s manufacturing business in the vibrant cities of Chengdu and Wuxi, China, to further expand its presence in the country’s technology sector.
Expand Business Portfolio and Customer Base
According to the announcement, the move aims to expand the company’s customer base and product portfolio. Additionally, the deal will also see the expansion of its smartphone component units while helping the company establish a strong foothold in the burgeoning mobility sector. The acquisition is viewed as a means to capitalize on the potential growth opportunities presented by Jabil’s business.
While BYD has gained widespread recognition for its electric vehicle business, the company started operations focusing on electronic components. This journey led to the listing of BYD Electronics shares, known as BE, on the Hong Kong Stock Exchange in 2007.
Its offerings included selling electronic components catering to consumer electronics products such as smartphones and laptops. This segment accounted for over 70% of the total revenue generated by the company last year. Now, the company has shifted its focus to automatic cars, but with the new acquisition of Jabil’s business, it is set to return to its roots, by further expanding its electronics unit.
BYD Electronics said the acquisition of Jabil’s mobility business is expected to enhance its market share and foster synergy with its existing products, ultimately boosting its overall competitiveness.
“While improving BE’s market share of products, the acquisition will effectively synergize with BE’s existing products, enhance the overall competitiveness, and ensure long-term sustainable development,” BYD said in an exchange filing, without divulging any further details about the acquisition.
Market Response to the Acquisition News
While responding to the news of the acquisition, shares of BYD Electronics initially experienced a dip of 9% in Hong Kong but swiftly recovered, showing a 1.4% rise by midday. Conversely, the parent company, BYD, saw a positive shift, with its Hong Kong-listed stock increasing by 2.2%.
Tu Le, the founder of Sino Auto Insights, highlighted that the move serves as a reminder of BYD’s multifaceted business prowess. Beyond electric vehicles, BYD holds a significant position in the mobile supply chain as a supplier. Notably, the company operates manufacturing facilities in China and Vietnam, which are dedicated to producing components for Apple‘s diverse product lineup.
Meanwhile, Jabil, on the other hand, has held a prominent position as one of the leading contract manufacturers in China, employing a substantial workforce across Sichuan, Guangdong, and Jiangsu provinces. Its expertise lies in creating and assembling components for Apple’s products.
The company’s chief executive, Kenny Wilson, said in a separate statement that selling its manufacturing business to BYD will empower them to “enhance our shareholder-centric capital framework, including incremental share buybacks,” Reuters reported.