China Electronics Corp., a Chinese- government controlled investor in technology companies, will increase its holding in TPV Technology, a move that may prompt a takeover offer. Mitsui & Co. also plans to buy a stake.

 

Royal Philips Electronics NV, has agreed to sell a 9.5% stake in TPV to CEIEC (H.K.), a unit of China Electronics, the Dutch company said in an e-mailed statement today. TPV, the world’s biggest contract maker of computer monitors and which has a market capitalization of HK$10.3 billion ($1.87 billion), suspended its shares from trading in Hong Kong and Singapore today pending an announcement on a possible general offer, it said in a regulatory filing.

 

China Electronics, TPV’s biggest shareholder, may be interested in adding to its stake in the monitor maker as demand for computer products increases, CIMB-GK Pte analyst Jonathan Ng said. Beijing-based China Electronics raised its holding in TPV to 27% in July, following a series of share purchases that began in 2007, according to Hong Kong stock exchange data.

 

“The fourth quarter turned out to be quite good for the industry as a whole, so the company should also do quite well,” said Ng, who rates TPV shares “outperform.”

 

China Electronics also plans to expand investment in producing liquid-crystal-display panels, a line of business that would integrate with TPV’s monitor operations, the Singapore- based analyst said.

 

Hong Kong listing rules require investors to make general offers to buy out other company shareholders when their holdings exceed 30%.

 

Japan’s Mitsui & Co. will pay HK$1.22 billion for a 10% stake in the company, according to a statement to the Tokyo Stock Exchange today.

 

Shane Tyau, director of corporate finance at TPV, declined to comment on the Philips and Mitsui transactions before a formal announcement. Phone calls to China Electronics’ general line in Beijing were unanswered throughout today.

 

TPV rose 1.7% to HK$4.88 in Hong Kong yesterday, while the company’s Singapore-listed shares last changed hands at 83 cents on Jan. 27, according to Bloomberg data.

 

TPV, whose investors also include Chi Mei Optoelectronics Corp., almost doubled in Hong Kong trading last year as the global economic recovery helped boost sales of PCs.

 

Philips’s stake in TPV will be reduced to less than 3% when the transaction with China Electronics is completed, the Amsterdam-based company said. It expects to book net proceeds of 95 million euros ($186.8 million) from selling the shares, without disclosing other financial terms of the disposal.

 

China Great Wall Computer Shenzhen Co., controlled by China Electronics, paid about HK$1.1 billion in May 2007 for 10% of TPV. China Electronics raised its stake seven times in 2009, according to data from the Hong Kong stock exchange.

 

China Electronics is directly controlled by the central government and owns stakes in companies including Nanjing Panda Electronics Co. and Great Wall Technology Co., it said on its Web site.

 

Chi Mei, Taiwan’s second-biggest LCD maker, last year said it will merge with Innolux Display Co., named by Citigroup Inc. as TPV’s biggest competitor in the monitor market. Chi Mei plans to keep its stake in TPV, said Chen, who is also spokesman for the Taiwanese shareholder. Chi Mei owns 7.1% of TPV, according to Bloomberg data.