Hon Hai Precision Industry Co, the world's largest contract electronics manufacturer, today agreed to buy digital camera maker Premier Image Technology to expand its product offerings to cameras, projectors and other optical gear.

The Taiwanese firm which owns Foxconn produces a plethora of technological marvels, including iPods and Macs for Apple, PlayStation 2 consoles for Sony and mobile phones for Nokia.

The company will pay $930 million for Premier Image in an all-stock transaction. The companies agreed to swap one share of Hon Hai stock for every 3.9 shares of Premier stock.

The deal will boost Hon Hai's ability to produce optical-related devices for clients. The company had been lagging in digital cameras and projectors until the deal with Premier, one of Taiwan's top producers of digital still cameras.

Premier is also a supplier for Sony, which is a major customer of Hon Hai's, giving the company another leg up in its dealings with the Japanese electronics giant. The relationship between Sony and Hon Hai has grown so tight in recent years that Hon Hai built a PlayStation laboratory in Taiwan to facilitate development of components and manufacturing processes for the game consoles.

The deal is expected to be finalised in December.

Henry King, an analyst at Goldman Sachs (Asia), in Taipei, was upbeat about the deal in a note to clients. He said the fact the two companies make products on behalf of Sony gives the deal synergy, while adding optical components and digital cameras will expand Hon Hai's product range.

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