ASE Proposes Full Purchase of SPIL, Trumping Tsinghua Deal

  • Offer is for NT$55 a share, same as Tsinghua's deal last week
  • ASE proposal requires termination of Tsinghua investment

Advanced Semiconductor Engineering Inc. made an unsolicited offer to buy out rival Taiwanese chip packager Siliconware Precision Industries Co., a $3.9 billion bid that trumps a deal last week by China’s Tsinghua Unigroup to take a minority stake. Shares of both companies surged.

ASE offered NT$55 per share in cash for each of the outstanding shares in SPIL that it doesn’t already own, a 21 percent premium to the latest close, the world’s largest semiconductor testing and packaging provider said in a statement Monday. SPIL said Friday it agreed to sell 1.03 billion new shares to Tsinghua at that same price, a dilution of approximately 33 percent to the current shares outstanding.

Monday’s counteroffer raises tensions between the two rivals after SPIL in September failed to fend off an unsolicited bid by ASE for a 25 percent stake, and shareholders rejected a subsequent white-knight offer by Foxconn Technology Group to buy new shares in SPIL. The $1.7 billion investment by Tsinghua Unigroup, an investment affiliate of China’s most prestigious university, would be used to fund expansion in Taiwan, it said Dec. 11.

"The Tsinghua deal not only does not provide any cash to SPIL’s shareholders, but will also significantly dilute the equity interests of SPIL’s shareholders," ASE said in its statement Monday. "Our proposal is for an all-cash offer that would provide immediate and certain cash value to SPIL’s shareholders."

SPIL shares jumped their daily 10 percent limit in Taipei to NT$50.10 while ASE climbed as much as 6 percent.

Cancellation Demanded

Current directors and management would be retained at their current compensation, and SPIL would be required to cancel the Tsinghua deal, ASE said. It asked SPIL to respond by Dec. 21.

“We cannot provide any feedback on the proposal. The board will need to discuss it,” SPIL spokesman Mike Ma said by phone. 

SPIL, which said Tsinghua’s investment would give the Chinese company a 25 percent stake, hadn’t been aware ASE was planning an offer, Ma said.

ASE took a 25 percent stake at NT$45 a share after surprising SPIL in August with a tender offer that was then 47 percent oversubscribed. SPIL’s board called on shareholders to reject the offer, saying the bid was too low and would "not be beneficial to the interests of the company and its shareholders."

ASE’s latest proposed transaction is worth approximately NT$129 billion ($3.9 billion), according to Bloomberg calculations.

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