The Fair Trade Commission (FTC) yesterday said that it would extend its review of Advanced Semiconductor Engineering Inc’s (ASE, 日月光半導體) planned acquisition of a majority stake in Siliconware Precision Industries Co (SPIL, 矽品精密) for another 60 days in order as it considers the deal’s impact on the industry and market competition.
ASE is the world’s largest chip packaging and testing service provider, while SPIL is the world’s No. 3 chip tester and packager.
Kaohsiung-based ASE launched a public tender offer for another 24.71 percent stake in Hsinchu-headquartered SPIL in December last year after securing a 25 percent stake of its local rival in September last year.
“Because there are still many unanswered questions regarding the nation’s industry, market structure and competition that needed to be clarified through further deliberation, the commission has decided to extend the review period,” the commission said in a statement.
The commission is scheduled to hold more meetings with related companies, industry representatives and government agencies before reaching a final decision, the statement said.
The commission received ASE’s application to buy a 27.71 percent share in SPIL on Feb. 4. It is expected to make a final decision in early May following the 60-day review extension.
SPIL, which has been resisting ASE’s takeover bid, yesterday welcomed the commission’s decision to extend the review period, saying that ASE’s planned deal is a “hostile takeover” and that if the deal is approved it would not be of an overall economic benefit to the nation.
Separately, SPIL said its board yesterday approved a proposal to distribute cash dividends of NT$3.8 to shareholders, the highest in eight years. The dividend payout was based on the company’s earnings of NT$8.76 billion (US$261.6 million), or NT$2.78 per share, last year, the company said in a filing to the Taiwan Stock Exchange.
With SPIL’s shares closing at NT$48.6 yesterday in Taipei trading, the planned cash dividend represented a dividend yield of 7.81 percent, higher than local banks’ fixed-term deposit interest rates.
The payout plan, as well as a proposal to spend NT$1.13 billion on employee bonuses and a plan to award NT$110 million to board directors, still has to be approved at the company’s annual shareholders’ meeting on May 16.
Due to the longer-than-expected review by the commission, ASE has extended the deadline of its acquisition bid by one month to March 17. If it still has not received regulatory approval by that time, then the public tender offer would fail, Yuanta Securities Investment Consulting Co (元大投顧) said in a client note yesterday.
The law would also forbid ASE from making another public tender offer on SPIL within a year because of the required one-year blackout period, Yuanta said.
Yuanta said the deal poses no antitrust concerns and should benefit shareholders as a whole, therefore it is not clear why the regulatory authority is so apprehensive about the case.
“In an effort to retain control, SPIL’s management wants the deal to fail. All SPIL needs now is for the FSC to stay quiet until March 17 in order for ASE’s public tender offer to fail,” Yuanta analyst Andrew Chen (陳治宇) said.
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