ASE’s le­gal ac­tion is an iso­lated case and will not af­fect mar­ket: FSC head

The China Post - - TAIWAN BUSINESS -

Tseng Ming- chung ( ), chair­man of the Fi­nan­cial Su­per­vi­sory Com­mis­sion (FSC), said Tues­day that a le­gal ma­neu­ver by IC pack­ager Ad­vanced Semi­con­duc­tor En­gi­neer­ing Inc. (ASE,

) against a ri­val is un­likely to af­fect Tai­wan’s broader eq­uity mar­ket.

On the side­lines of leg­isla­tive hear­ing, Tseng said an in­junc­tion filed by ASE to bar a spe­cial share­holder meet­ing sched­uled by Sil­i­con­ware Pre­ci­sion In­dus­tries Co. ( ) for Oct. 15 was just an iso­lated case, and he doubted the case would send rip­ples through the en­tire mar­ket.

The in­junc­tion aims to pre­vent Sil­i­con­ware from try­ing to se­cure ap­proval from its share­hold­ers for a stock swap deal with Hon Hai Pre­ci­sion In­dus­try Co. (

), the world’s largest con­tract elec­tron­ics maker, to set up a strate­gic part­ner­ship.

Tseng’s re­marks re­sponded to con­cerns raised by John Hsuan , an in­de­pen­dent di­rec­tor of Sil­i­con­ware, who said on Sun­day that if the court ap­proved the re­quest for the in­junc­tion it could be a dis­as­ter for Tai­wan’s stock mar­ket.

Hsuan said the move by ASE, which be­came Sil­i­con­ware’s big­gest share­holder on Oct. 1 af­ter a suc­cess­ful ten­der of­fer, could en­cour­age share­hold­ers of listed com­pa­nies to fol­low suit and block share­holder meet­ings in the fu­ture.

Late last week, ASE filed an in­junc­tion to block the meet­ing be­cause of its fears that once Sil­i­con­ware se­cures share­holder ap­proval for the tie-up with Hon Hai, Hon Hai will re­place ASE as Sil­i­con­ware’s largest share­holder.

ASE com­pleted its ten­der of­fer to take a 25 per­cent stake in Sil­i­con­ware af­ter the Sil­i­con­ware stake was de­liv­ered on Oct. 1. But ASE was not al­lowed to at­tend the share­holder meet­ing be­cause the dead­line for reg­is­tra­tion was Sept. 16.

If the stock swap deal in which Sil­i­con­ware would is­sue new shares were to go through, Hon Hai would take a 21.24 per­cent stake in Sil­i­con­ware, which would own a 2.2 per­cent stake in Hon Hai, and ASE’s stake in Sil­i­con­ware would be di­luted to about 19 per­cent, trail­ing Hon Hai.

Tseng said ASE’s ten­der of­fer was con­ducted in line with Tai­wan’s Se­cu­ri­ties and Ex­change Act, and the com­pany’s fil­ing of an in­junc­tion was also le­gal.

He said the FSC, the top fi­nan­cial reg­u­la­tor in Tai­wan, re­spected both Sil­i­con­ware’s de­ci­sion to hold a share­holder meet­ing to se­cure ap­proval for an al­liance with Hon Hai and ASE’s le­gal ac­tion to bar the share­holder meet­ing, stress­ing that these were both le­gal moves.

The stock swap deal with Hon Hai was pro­posed to counter ASE’s ten­der of­fer, which Sil­i­con­ware be­lieves was aimed at paving the way for a hos­tile takeover in the fu­ture.

ASE con­tended, how­ever, that the deal with Hon Hai will di­lute Sil­i­con­ware’s earn­ings per share and would not be in the in­ter­est of its share­hold­ers.

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