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Fairchild offers to buy out IC designer

US power management chipmaker Fairchild Semiconductor Interna-tional Inc yesterday said that it planned to acquire Taiwanese power conversion chip designer System General Corp (崇貿科技) for US$200 million in cash to secure sales and profit growth.

Fairchild's offer is the latest bid by a foreign firm to buy out a Taiwanese company after the US-based private fund equity group led by Carlyle offered to buy local chip packager Advanced Semiconductor Engineering Inc (日月光半導體) late last year.

Fairchild Semiconductor has offered to buy System General's total of 68.97 million outstanding shares at NT$93 (US$2.85) per share, the South Portland, Maine-based power management chipmaker said in a statement posted on its Web site yesterday.

That would represent about a 13-percent premium to System General's closing price of NT$91.8 yesterday, setting a 12-month high after finishing at NT$92.2 on Jan. 3 last year.

The acquisition would be made through a chipmaking subsidiary of Fairchild, with System General emerging as the surviving company, the statement said.

The Taiwanese company's management team and all 250 employees in Taiwan, China and US branches would be retained after the deal is closed, it added.

In response, System General said that its board of directors would hold an ad hoc meeting tomorrow to decide whether to accept or reject Fairchild's offer, company spokeswoman Chen Yu-ling (陳玉玲) said in a telephone interview.

System General, established in 1983, may stop trading on the Taiwan Stock Exchange by the end of this year if the acquisition is completed based on Fairchild Semiconductor's plan, Chen said.

Earlier last month, the Chinese-language Economic Daily News reported that Taiwan's top power system manufacturer Delta Electronics Corp (台達電) planned to buy out System General. The latter has, however, denied a series of buyout speculation, including offers from chipmaking giants like Intel Corp and Texas Instruments Inc.

"Acquiring System General is a natural extension of Fairchild's business strategy to invest aggressively to expand our sales and margins by pursuing fast-growing power analog markets," Fairchild Semiconductor chief executive Mark Thompson said in a statement.

Fairchild Semiconductor said it expected the acquisition to have a neutral effect on Fairchild's earnings per share this year and to be accretive to earnings per share next year and beyond.

The US company said that 30.88 percent of System General's shareholders have already agreed to tender their shares.

The company hired Yuanta Core Pacific Securities (元大京華證券) to offer the tender to interested System General shareholders to sell their shares. The offer ends on Jan. 31.

System General saw its net income drop 23.4 percent year-on-year to NT$144 million (US$4.44 million) in the first three quarters of last year after the US International Trade Commission ruled in favor of Fairchild Semiconductor's rival Power Integrations Inc in a patent lawsuit.

During the same period, revenues edged up a mere 0.38 percent to NT$895 million.
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