Jason Chang of Taiwan's Advanced Semiconductor Engineering (ASE), said he would make the 18.4 percent of shares he controls available to a consortium led by the Carlyle Group.
Chang has agreed “subject to certain conditions, to participate as a member of the consortium and to roll the shares of ASE owned by him and ASE Enterprises Limited, his affiliated holding company, into an equity interest in the holding company formed by the consortium,” ASE announced today.
The buyout deal, valued at up to US$6.4bn by local media, will be a record for Taiwan mergers and acquisitions if it goes ahead. ASE shares listed on the local Taipei exchange rose seven percent today – the maximum daily limit. The consortium's initial offer was some 13 percent higher than ASE's price prior to news of the deal. However, following heavy market interest, the offer now represents only a three per cent premium on the current price.
ASE tests and packages semiconductor chips. The company receives silicon wafers from chip makers, cuts those wafers into individual chips, tests them, and embeds them in the familiar black plastic packaging. The company's close proximity to giant contract chip makers Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronics Corp (UMC) has made it the world's largest chip packager, and a vital link in the global chip supply chain.
“Discussions between ASE and the Consortium have not been completed and there can be no assurance that an offer will ultimately be made by the Consortium or what the ultimate terms of such an offer would be,” ASE announced in a press statement.
Analysts said that ASE might take advantage of the takeover to delist from the local stock exchange, and thereby sidestep government restrictions on investment in Taipei's political rival, China.
“While ASE made no comment on the true purpose behind the buyout offer, it is reasonably speculated in the market that the proposed buyout will make ASE a foreign company, relieving the company from the China investment restriction imposed by the Taiwan government. Re-listing on another stock exchange may offer a better valuation multiple,” commented analysts from Primasia Securities of Taipei in a research note to clients today.
Depending on the success of ASE's action, other local semiconductor-industry services companies might follow suit, the analysts speculated.
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