The nation’s stock market watchdog Taiwan Stock Exchange Corp (TWSE) yesterday said it would launch a preliminary inquiry into possible insider trading or incorrect information disclosure linked to the merger of the nation’s major panel makers, Chi Mei Optoelectronics Corp (奇美電子) and Innolux Display Corp (群創光電).
The two companies unveiled the merger plan on Saturday morning, ending speculation about a tie-up.
The merger, estimated at nearly NT$200 billion (US$6.2 billion) with a 22 percent premium on Chi Mei’s closing price on Friday, will create a new entity called Chimei Innolux Corp (奇美電子), which will be strong enough to challenge the leading position of AUO Optronics Corp (友達光電), the world’s No. 3 liquid-crystal-display (LCD) panel maker.
“We launch inquiries if we find anything unusual such as stock trading or anything abnormal when it comes to big things like mergers,” TWSE spokesman Stanley Chu (朱士廷) said by telephone.
“We will start an inquiry [into the timeline of the merger],” Chu said.
Two days before the merger was announced, Chi Mei trading volume spiked to 142 million shares on Thursday and 184 million shares on Friday, four times and five times higher than its averaged daily turnover of 34.7 million shares in the first eight trading days of the month respectively, information on TWSE’s Web site showed.
Executives at Chi Mei, the nation’s No. 2 maker of LCD panels used in PCs and TVs, and Innolux, the world’s No. 2 maker of LCD PC monitors, were tight-lipped before the announcement and tried to quash speculation of insider trading, reliable sources said.
Innolux, a Miaoli-based subsidiary of Hon Hai Precision Industry Co (鴻海精密) — the world’s biggest contract electronics manufacturer — announced on Saturday a swap of one share for 2.05 shares of Chi Mei, the deal’s terms showed.
One day prior to the merger announcement, Chi Mei in a statement sent to the Taiwan Stock Exchange denied media reports about its planned merger with Innolux.
“It is purely media speculation. At the moment, the company does not have such a [merger] plan as the report speculated,” Chi Mei said at the time.
Chu said the statement appeared incompatible with what the company was planning.
“We will make inquiries into this part on Monday,” Chu said.
Shares of Innolux and Chi Mei closed at NT$47 and NT$18.8 respectively on Friday.
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