Carlyle applies to buy ASE

The US private equity consortium led by the Carlyle Group filed a buyout plan for the world's biggest chip packager, Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), to the government, an official told reporters yesterday.

The announcement came two months after the Kaohsiung-based chip packager said the private equity fund had offered a NT$179.4 billion (US$5.47 billion) buyout proposal on Nov. 24, which would make it the biggest technology buyout ever in Taiwan.

"We received the investment application from Carlyle Group on Wednesday," said Emile Chang (張銘斌), a spokesman of the Investment Commission, in a phone interview.

The commission is in charge of overseas and China-bound investments and incoming investors.

FEW DETAILS

Chang declined to reveal the amount of investment the US private equity investor planned to make, or to comment on whether ASE would stop trading shares on the Taiwan Stock Exchange if the buyout goes through.

Carlyle planned to acquire all of ASE's 4.6 billion outstanding common shares at NT$39 per share.

LOCAL SUBSIDIARY

Before doing so, however, Carlyle is preparing to set up a local subsidiary and will use the unit to acquire ASE, a common move for overseas companies planning to acquire Taiwanese firms, Chang said.

That move would mean that Carlyle's Taiwanese subsidiary would be considered a local company, bound by local legislation. The subsidiary would therefore be barred from investing over 40 percent of the company's overall net value in China, Chang said.

Chang's comment doused speculation sparked by the buyout offer that ASE was attempting to tap into the world's fastest growing chip market, China, by transferring ownership of the chip packager to a foreign investor and thus bypassing Taiwan's limits on China-bound investment.

As part of the initial agreement with Carlyle, ASE said that chairman Jason Chang (張虔生) and the rest of the company's management team would remain largely unchanged after the deal is closed.

Emile Chang rebutted local Chinese-language media reports that the Investment Commission was scheduled to review the acquisition proposal next Wednesday at the earliest.

"We have not set a time table for the review yet," he said.

REVENUES

ASE said earlier this month that fourth-quarter revenues had decreased 14.51 percent to NT$22.57 billion from a year ago, but the total revenues for last year had expanded 19.5 percent year-on-year to NT$100.42 billion.

The stock price of ASE has climbed 6.33 percent since the Carlyle Group buyout bid in late November -- outperforming the benchmark TAIEX index's 4.5 percent gain during the same period -- and closed at NT$37.75 yesterday.

Its shares were also supported by speculation prompted by a report carried by the Chinese-language Economic Daily News that Carlyle may actually be preparing to bid NT$42 per share for ASE. The report did not cite any source.