ASE to buy control of Singapore's ASE Test for US$780m

The world's largest chip packager and tester, Advanced Semi-conductor Engineering Inc (ASE, 日月光), said yesterday that it planned to increase its stake in a Singapore-based chip testing affiliate in a deal worth US$780 million in cash.

ASE shares rose 0.76 percent to NT$33.05 yesterday on the Taiwan Stock Exchange, outperforming the TAIEX's 0.63 percent decline. The share purchase was announced after the market closed.

In a statement, ASE said it signed a Scheme Implementation Agreement with Singapore-based ASE Test Ltd (福雷電子) to buy its shares listed on the NASDAQ at US$14.78 per share.

The Kaohsiung-based company said it would also buy ASE Test's Taiwanese Depositary Receipts at US$0.185 per unit.

The Taiwanese company currently owns 51 percent of ASE Test.

The deal will give ASE complete control of ASE Test.

The US$14.78 offer represents a 25.57 percent premium, compared with ASE Test's closing price of US$11.77 per unit on the NASDAQ on Friday.

US markets were shut for the Labor Day holiday on Monday.

"The acquisition will help us streamline the company's structure and save some operational spending including the listing charges," ASE spokesman Freddie Liu (劉詩亮) said by telephone.

The acquisition would also make better use of the company's resources and strengthen its brand image, ASE said in a filing to the Taiwan Stock Exchange.

Liu expected the deal's impact would begin to be seen early next year as the deal was scheduled to close by the end of the year. ASE Test will delist from the US and Taiwanese stock markets after the deal, he said.

To fund the acquisition, ASE would arrange a US$750 million syndicated bank loan, Liu said.

Citigroup advised ASE on the share purchase, while Lehman Brothers helped ASE Test.