Phison Electronics Corp (群聯電子), a designer of NAND flash memory controllers and modules, yesterday said it is prepared to counter a potential hostile takeover and vulture investors’ attacks on its stock price.
Phison shares have over the past three months sunk more than 20 percent to NT$330.5 yesterday, valuing the company at NT$65.11 billion (US$2.17 billion) and exposing it as vulnerable to a takeover.
“We have found abnormal trading of the company’s stock over the past months. We are worried about a possible hostile takeover or an attack by vulture investors,” Phison founding chairman Pua Khein-seng (潘健成) told a media briefing.
“It would be costly to launch a hostile takeover of the company,” Pua added.
The company’s fundamentals are healthy, as Phison’s revenue and net profits have hit record highs over the past few quarters, he said.
The company’s cumulative profit in the first three quarters surged 35 percent to NT$4.55 billion, or NT$22.69 per share, from NT$3.37 billion, or NT$17.18 per share, over the same period last year.
Short-selling investors sell stock they do not hold in the expectation that the cost is likely to fall due to weak fundamentals.
“We are optimistic about next year’s outlook as we have built three major growth pillars — flash memory controllers, industrial flash memory modules and chips for consumer electronics,” Pua said.
To deter a potential buyout, Phison might consider issuing the 20 million new shares that shareholders approved in June to increase the cost, Pua said.
Phison has a strong investor structure, given that its managers and strategic partners — including Toshiba Corp and Kingston Technology Co (金士頓) — hold about 30 percent of the firm, Pua said.
Phison might also consider convening an extraordinary shareholders’ meeting to force short-selling investors to buy back shares and return them to the brokerages from which they were borrowed, he said.
The last resort would be launching a share buyback program to safeguard shareholders’ interests, Pua said, adding that the company plans to allocate NT$3 billion to a share repurchase plan if the abnormal trading becomes exacerbated.
Pua also said allegations that he violated the Securities Exchange Act (證券交易法) should not affect the company’s operations.
Pua and others were questioned by the Hsinchu District Prosecutors’ Office over allegations of embezzlement through transactions between Phison and its subsidiaries, and filing of inaccurate corporate financial statements between 2009 and 2014.
After a year-long investigation, prosecutors did not charge Pua, as they determined that he did not benefit from the transactions.
However, the Taiwan High Prosecutors’ Office ordered investigators to re-examine the case due to insufficient information.
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