Arima acquisition rumour sparks denial

Taiwan-based handset maker, Arima Communications, is about to be acquired by the Finnish mobile communications group Elcoteq, according to Taiwanese news service DigiTimes.

The report - which cited unnamed sources - said that the two companies are in the final stages of acquisition talks, and that an official announcement is imminent.

The rumour saw traders flocking to buy Arima’s shares: by the close of trading yesterday Arima’s share price had risen by almost 7%.

However, Arima has denied that any talks are happening, whilst representatives from Elcoteq declined to comment, saying that it is not company policy to respond to rumours.

Arima manufactures mobile handsets for a number of vendors, including Sony Ericsson and LG Electronics.

It has around 550 research and design staff based in China and Taiwan. Last year the company made an operating loss of NT$645 million on sales of almost NT$15 billion.

Elcoteq’s 2007 sales totalled €4.04 billion, leading to an operating loss of €96.3 million.

If the acquisition were to go ahead, the only major ODM left in Taiwan would be Compal Communications.

Compal has recently come under fire from its major customer, Motorola, because of poor handset sales.