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