ASE may not stop takeover bid despite HH-SPIL deal
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.