ASE Calls on SPIL to Reject Hon Hai Deal After Taking 25% Stake

  • ASE becomes largest shareholder in rival after winning bid
  • World's largest chip tester can't vote on Hon Hai deal

Advanced Semiconductor Engineering Inc. urged a rival it invested in to reject a white knight deal with Hon Hai Precision Industry Co.

ASE Chairman Jason Chang met with Siliconware Precision Industry Co. chairman Bough Lin Wednesday to discuss its acquisition, a rare hostile purchase in Taiwan. In a subsequent statement, ASE said a separate deal with Hon Hai will harm SPIL’s shareholders. That comes a day after ASE, the world’s largest chip tester, emerged victorious in its own $1.1 billion bid to take a stake.

“We would like to express to Chairman Lin our strong objection against the Hon Hai Deal,” ASE said in the statement. “SPIL’s proposed issuance of new shares to facilitate the share exchange with Hon Hai would be dilutive for SPIL’s existing shareholders.”

SPIL fell 0.9 percent to NT$38.55 in Taipei as of 10:51 a.m. on Thursday, extending declines to a fourth day. ASE rose as much as 2.5 percent.

ASE on Aug. 21 made an unsolicited offer for 24.99 percent of SPIL at NT$45 per share, 34 percent above that day’s close. A week later, SPIL called on shareholders to reject the offer as being too low, before proposing a share swap with Foxconn Technology Group’s Hon Hai unit at an even lower price. 

ASE has pledged not to interfere in SPIL’s management, labeling its purchase a purely financial investment. SPIL says a deal with Foxconn would give it access to more customers and boost synergy between chip testing and packaging and electronics assembly.

SPIL said Wednesday it will proceed with an Extraordinary Meeting on Oct. 15 to vote on the Hon Hai deal. If successful, the swapping of new shares with Hon Hai would give the assembler of Apple Inc.’s iPhones 840.6 million shares of SPIL, equal to a 21 percent stake. It also would dilute the 779 million shares ASE bought through public tender, a process that doesn’t require shareholder approval.

With the rolls closed Sept. 16, ASE won’t be able to vote in next month’s meeting despite being the largest shareholder.