TPV Technology, the world’s biggest contract maker of computer monitors, said shareholder China Electronics Corp. agreed to boost its investment in the company, a move that will trigger a takeover offer.

China Electronics’ CEIEC (H.K) unit and Japan’s Mitsui & Co. plan to offer HK$5.20 (94 cents) apiece for outstanding TPV shares, according to a Hong Kong stock exchange filing today.

The Chinese shareholder agreed to buy a 9.5% stake in TPV from Royal Philips Electronics NV for HK$1.04 billion, raising its holding above the 30% threshold at which investors in Hong Kong-listed companies are required to table a general offer. Mitsui agreed to buy a 10% stake in TPV for HK$1.22 billion, the statement said. Mitsui and CEIEC are paying HK$5.20 a share.

State-owned 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. The central government-controlled investor in technology companies 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.

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

TPV rose 1.7% to HK$4.88 in Hong Kong on Jan 28 before the shares were suspended from trading on Jan. 29 pending the announcement. The company’s Singapore-listed shares last changed hands at 83 cents on Jan 27.

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.

China Electronics’ purchase of shares from Philips requires the approval of Chinese government agencies including the National Development and Reform Commission, today’s statement said.

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 in an e-mailed statement on Jan 29. It expects to book net proceeds of 95 million euros ($186 million) from selling the shares, without disclosing other financial terms of the disposal.

Great Wall Computer
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 website.

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 spokesman Eddie Chen said on Jan 29 the Taiwanese shareholder plans to keep its stake in TPV. Chi Mei owns 7.1% of TPV, according to Bloomberg data.