TECO Announces Acquisition of Shenchang Electric Co. , accelerating Entry into the Global Transformer Market
TECO Electric & Machinery Co., Ltd.
(1504) announced today that its board of directors has passed a resolution to
acquire Shenchang Electric Co., Ltd., a manufacturer of transformers, for a
total consideration not exceeding NT$550 million. This acquisition, also
includes to formalize a strategic alliance with Shenchang 's overseas
affiliate, the Indonesian company PT. Sintra Sinarindo Elektrik. TECO’s
Chairman, Morris Li, emphasized that Shenchang is renowned for its
high-efficiency, energy-saving transformer technology and possesses the
competitive strength to excel in global markets. This acquisition demonstrates
TECO's initial step into the global transformer market, completing the gap in
TECO’s electrification product portfolio. It also marks a significant milestone
in TECO's journey toward achieving an “Industrial Electrification Integrator”
and global net-zero sustainability efforts.
Shenchang, founded in 1971, primarily
produces distribution transformers and has been active in the Indonesian market
since 1996. Over the years, Shenchang and the Indonesian company SINTRA have
become trustworthyd transformer suppliers for global leading companies such as
Taiwan Power Company, PT. PLN (Persero), Formosa Plastics Group, and Siemens,
earning a solid reputation for delivering high-quality products. TECO plans to
acquire approximately 57.2% of Shenchang 's shares to become the majority
shareholder. Looking ahead, TECO plans to assist Shenchang in expanding its
manufacturing facilities in Taiwan. By leveraging its strategic alliance with
the Indonesian company SINTRA and TECO’s global expansion strategy, the new
proposed partnership will swiftly penetrate into the North American and
Taiwanese markets, and expanding its product portfolio to 69kV to 161kV power
transformer in the near future. The acquisition is expected to contribute to
TECO Group's revenue starting in the fourth quarter of 2024.
Vicky Hsiao, Chairman of Shenchang,
expressed optimism about the strategic collaboration with TECO and highlighted
the unprecedented growth opportunities in the global transformer market. In the
past, Shenchang and SINTRA have focused on local markets due to resource
limitations. Through the partnership with TECO enables rapid expansion of
production capacity, bolstering Shenchang’s participation in Taipower’s Grid
Resilience Strengthening Construction Plan. Additionally, SINTRA will jointly
support TECO’s global transformer business and electrification integration
solutions, with a particular focus on meeting the demands of TECO-Westinghouse
in North America. TECO and SINTRA also plan to expand electromechanical business
opportunities in Indonesia. Meanwhile, Shenchang and SINTRA are positioning
themselves to transition from regional markets to the international market,
supported by TECO Group's global platform and resources. Both companies are
optimistic about this transition and express strong confidence in their future
growth.
Amidst the
growing global emphasis on climate change and the rising demand for data
centers, the United States is aggressively driving significant infrastructure
upgrades, and the world signaling a transition to grid systems. The partnership
between TECO and Shenchang positions them to provide green solutions that meet
consumers’ needs. The initial focus will be on meeting the enormous demand for
distribution transformers in North America, Taiwan (particularly within the
industrial sector), new energy projects, data centers, and Taipower’s Grid
Resilience Strengthening Construction Plan. TECO’s Chairman, Morris Li,
highlighted that leveraging the high technical capabilities of Shenchang and SINTRA
in distribution and power transformers, combined with the cost advantages of
Taiwan and Southeast Asia, will enable the formation of an efficient,
short-lead-time supply chain. Coupled with TECO’s comprehensive global sales
network, this partnership aims to capture significant opportunities in the
global transformer market. Morris Li further emphasized that this acquisition
aligns with TECO’s newly outlined three-year strategic plan, reinforcing the
focus on enhancing development in key overseas markets and demonstrating the high
execution ability of the new board of directors.