ASE may not stop takeover bid de­spite HH-SPIL deal

The China Post - - LOCAL -

Ad­vanced Semi­con­duc­tor En­gi­neer­ing (ASE) may not be de­terred from its bid to take over con­trol of its ma­jor com­peti­tor, Sil­i­con­ware Pre­ci­sion In­dus­tries (SPIL), de­spite the lat­ter’s freshly an­nounced strate­gic part­ner­ship with Hon Hai Pre­ci­sion In­dus­try, ac­cord­ing to an­a­lysts.

ASE looks keen to main­tain its sta­tus as the world’s top IC pack­ag­ing and test­ing house by tak­ing over SPIL, cur­rently the third largest in the sec­tor, the an­a­lysts said.

ASE’s world­wide lead­er­ship has come un­der threat fol­low­ing the re­cent merger be­tween a China-based com­peti­tor, Jiangsu Changjiang, with the global num­ber-four IC pack­ager, the Sin­ga­pore-based STATS ChipPAC, the an­a­lysts in­di­cated.

ASE has al­ready said it will go ahead with its pre­vi­ously an­nounced bid to ac­quire up to 25 per­cent of SPIL in re­sponse to the lat­ter’s share swap deal with Hon Hai, the world’s big­gest con­tract man­u­fac­turer of elec­tronic de­vices who makes many of Ap­ple’s prod­ucts, in­clud­ing the iPhone.

The pur­port­edly hos­tile takeover bid, an­nounced on Aug. 21, took SPIL and the in­dus­try in gen­eral by sur­prise at a time when the lo­cal bourse was tum­bling.

Coun­ter­ing the takeover bid, SPIL struck an equally sur­pris­ing deal Fri­day to let Hon Hai be­come its big­gest share­holder through a stock swap.

Ac­cord­ingly, Hon Hai will hold a 21.24-per­cent stake in SPIL, which will in turn get a 2.2-per­cent stake in Hon Hai.

It means that even if ASE man­ages to ac­quire the tar­geted num­ber of SPIL shares an­nounced on Aug. 21, its stake in the com­peti­tor will still be di­luted to less than 20 per­cent as a re­sult of SPIL’s cap­i­tal in­cre­ment due to the Hon Hai stock swap.

But the an­a­lysts said ASE may not give up, and there is a pos­si­bil­ity that the com­pany will raise the tar- get for share ac­qui­si­tion.

It re­mains to be seen how in­vestors will re­spond to the SPIL-Hon Hai deal an­nounced af­ter the stock mar­ket closed on Fri­day. But the share prices of SPIL and ASE both soared last week be­cause of the takeover bid.

The an­a­lysts said the SPIL-Hon Hai strate­gic part­ner­ship seems ben­e­fi­cial to both par­ties. SPIL may be able to break into Ap­ple’s up­stream sup­ply chain through Hon Hai, the an­a­lysts said.

For Hon Hai, the deal is a bar­gain, al­low­ing it to take a ma­jor stake in a prof­itable firm at a dis­counted price, said an­a­lysts.

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