MediaTek Inc’s (聯發科技) head of China operations resigned on Friday as Taiwanese authorities probed possible insider trading linked to the company’s planned US$3.8 billion merger with MStar Semiconductor Inc (晨星半導體).
Lu Hsiang-cheng (呂向正) is being investigated for insider trading along with four other people and posted NT$1 million (US$34,000) in bail, Taipei Deputy Chief Prosecutor Huang Mou-hsin (黃謀信) said on Friday.
Lu quit for personal reasons, MediaTek chief financial officer David Ku (顧大為) said by telephone. He declined to comment on the firm’s former China head’s “personal conduct.”
Shares of the two Hsinchu-based chipmakers have surged more than 30 percent since MediaTek announced the merger proposal in June last year, compared with a 13 percent increase in the TAIEX.
The deal would be the fifth-largest semiconductor acquisition globally in the past decade. The companies, which together make 70 percent of the chips used in televisions, face stagnating global demand for TV sets.
Shares of both companies climbed 1.1 percent in Taipei on June 22 last year before the merger was formally announced.
Huang declined to give a timeframe for when suspicious trading was said to have occurred.
Mediatek stock advanced 0.1 percent to NT$366.5 on Friday while MStar gained 0.4 percent to NT$251.5. Meanwhile, the TAIEX rose 0.1 percent.
Mediatek and MStar provided documents to authorities on Thursday the firms said in separate stock exchange statements.
The investigations relate to the actions of individuals and not to the companies’ operations, they said.
MStar turned over shareholder information and trading records and MediaTek provided materials to investigators looking into the planned deal, they said.
MStar shareholders would get 0.794 of a new MediaTek share plus NT$1 in cash for each unit of stock held, a 20 percent premium on the closing price on the day of the announcement, the companies said at the time.
Regulatory delays have raised the price of the deal, Ku said last month, without quantifying the cost. China’s antitrust regulator remains the final hurdle after Taiwanese and South Korean authorities gave their approvals.
Insider trading is punishable by as much as 10 years in prison in Taiwan. In separate cases, executives of Inventec Appliances Corp (英華達) and AU Optronics Corp (友達光電) have been acquitted of any such offense.
MediaTek named Aaron Chang (章維力) as its new head of China operations, it said in a stock exchange filing on Friday.