ASE-SPIL holding company approved by FTC

The top two integrated circuit packaging and testing services providers in Taiwan, Advanced Semiconductor Engineering Inc. (ASE,日月光) and Siliconware Precision Industries Co. (SPIL, 矽品), have gained government approval to create a joint holding company, the Fair Trade Commission (FTC) said Wednesday.

Under the deal, the holding company will own 100 percent equity interests in both ASE and SPIL but the two companies will continue to operate independently, the FTC said.

It said the deal will not unfairly affect competition in the global IC packaging and testing services industry, which has about 70 companies, since ASE and SPIL will be unlikely to cut prices as independently operating firms.

The benefits of creating the joint holding company include lower research and development costs for ASE and SPIL and the establishment of standards on certain production processes, which in turn will boost Taiwan’s IC packaging and testing service industry, according to the FTC.

The joint holding company deal was announced in May by the two companies, which said each ASE common share will be swapped for 0.5 shares of the new holding company, while each SPIL share will be exchanged for NT$55 (US$1.73) in cash.

Under the umbrella of the new holding company, ASE and SPIL will retain their names, management teams and employees. The two companies will also maintain their current operations, individual structures, compensation systems and employee benefits.

Currently, ASE is the largest shareholder in SPIL, holding a 33.29 percent stake that was obtained by making tender offers and buying shares on the open market.

Before the agreement was reached to create the holding company, SPIL had repeatedly described ASE’s tenders as a hostile takeover bid.

Commenting on the FTC’s approval of the deal, the Industrial Development Bureau under the Ministry of Economic Affairs said the merger will create synergies in Taiwan’s semiconductor industry as the two companies are complementary.

Meanwhile, the FTC said its decision was reached one month ahead of schedule, with its staff working overtime on the case.

When the shares of the new holding company are listed on the domestic and U.S. market, shares of ASE and SPIL will be delisted from the local main board, and their American depositary receipts (ADRs) will also be delisted on the New York Stock Exchange.

Source: Focus Taiwan News Channel

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