San'an optoelectronics addresses acquisition of loss-making LED firm

San'an Optoelectronics has responded to a regulatory inquiry from the Shanghai Stock Exchange concerning its acquisition of a global LED enterprise. The target company, a manufacturer of LED products, reported a loss of $0.67bn in 2024 and $0.17bn in Q1 2025, with revenues of $5.89bn and $1.41bn respectively. This unprofitability is attributed to low factory utilization, high raw material procurement costs, and elevated operating expenses, as revealed in its simulated financial statements.

The acquisition, valued at $2.39bn on a "cash-free, debt-free" basis, aims to expand San'an Optoelectronics' product lines, accelerate overseas production, and secure customer resources. Post-acquisition, the company projects annual cost and expense savings of approximately $75m, to be fully realized by 2027. These savings are expected through reduced raw material costs, optimized manufacturing processes, lower IT expenses, and improved financial, sales, and management efficiencies.

The target company's current shareholders are a syndicate of creditors. San'an Optoelectronics will take measures to ensure customer and order stability, including direct communication with key clients and leveraging existing partnerships. The audit of the target company's financials is ongoing, with a report anticipated by the end of November 2025.