China group terminates accord to buy ChipMos stake; new deal inked

ChipMos Technologies Inc. (南茂), the fourth- largest integrated circuit packaging and testing firm in Taiwan, has said that it has terminated a deal in which China-based Tsinghua Unigroup (清華紫光) will buy a stake in the Taiwanese firm through a private placement.

But the bilateral ties will not stop here. Both sides announced on the same day that they have agreed that Tsinghua Unigroup will buy a 54.98 percent stake in ChipMos Technologies (Shanghai) Ltd. (上海宏茂), which is currently 100 percent owned by ChipMos.

The termination of the private placement deal, where Tsinghua Unigroup, a Beijing-backed high-tech conglomerate, aimed to take a 25 percent stake in ChipMos, came after Taiwan’s authorities have adopted a prudent stance to scrutinize Chinese investments in the local IC sector.

In late 2015, Tsinghua Unigroup and ChipMos inked an agreement on the private placement and submitted the deal to Taiwan’s Investment Commission for approval.

In addition, Tsinghua Unigroup reached agreements to buy a stake in Siliconware Precision Industries Co. (矽品) and a stake in Powertech Technology Inc.(力成), the second- and third-largest IC packaging and testing firms in Taiwan, respectively.

The three deals sparked an outcry in the local market amid rising concerns that the Chinese IC industry was gearing up to expand by simply swallowing Taiwanese firms.

The deal with Siliconware was terminated as the Taiwanese firm announced the establishment of a holding company with Advanced Semiconductor Engineering Inc. (日月光), the largest IC packaging and testing firm in Taiwan. The deal with Powertech remains pending regulatory approval, but the chances of the Taiwan government approving it are slim.

The termination of the deal to sell a 25 percent stake in ChipMos has obtained a green light from the company’s board of directors. On the other hand, the deal for ChipMos to sell the majority stake in its Shanghai unit for 498 million Chinese yuan (US$72.28 million) has also secured approval from the parent company’s board.

After the transactions, Tsinghua Unigroup and ChipMos will raise the paid-in capital in the Shanghai subsidiary. ChipMos (Shanghai) is expected to get a total of 1.074 billion yuan in capital through the deals with Tsinghua Unigroup.

ChipMos said that the ties to be established by the Shanghai subsidiary and Tsinghua Unigroup are expected to help the unit to expand its capacity to meet rising demand from its clients. ChipMos said that the fund injection by Tsinghua Unigroup will help ChipMos (Shanghai) resolve a fund shortage during the expansion over the next three years.

ChipMos said that after the expansion, the Shanghai unit is expected to enjoy economy of scale, which could help the subsidiary leave its current losses behind.

ChipMos said that the proceeds resulting from the disposal of the stake in the Shanghai unit are expected to be translated into an additional NT$2.67 in earnings per share for the parent company’s shareholders in 2016.

Source: Focus Taiwan News Channel

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