SAS, Covalent Materials agree on lower purchase price for silicon wafer unit

By Kevin Chen  /  Staff reporter

Tue, Nov 06, 2012 - Page 14

Taiwanese solar wafer maker Sino-American Silicon Products Inc (SAS, 中美晶) has reached an agreement with Covalent Materials Corp to lower the purchase price of the Japanese firm’s silicon wafer business.

SAS said in a statement yesterday that it had slashed the price by 16 percent to ¥23.46 billion (US$292 million) for its acquisition of the Japanese firm’s semiconductor wafer manufacturing unit, from the ¥28 billion it reached earlier this year.

On April 1, SAS announced it would acquire the wafer manufacturing business of Covalent Materials through its foundry-business unit, GlobalWafers Co (環球晶圓). The Taiwanese firm would also obtain 350 patents via the acquisition, according to SAS chairman and chief executive official Lu Ming-kuang (盧明光).

“According to the purchase agreement, the final price shall be adjusted pursuant to the closing date’s net asset value,” the Hsinchu Science Park-headquartered company said in the statement.

SAS expected the lower-priced deal to have an accretive effect on its net asset value per share and its earnings per share.

“SAS acquires the company with a better price and synthesizes its semiconductor business group,” the statement said.

The new deal comes as the solar industry has seen falling wafer and solar cell prices for several quarters as Chinese firms expand capacity. Under the negative market conditions, executives of Motech Industries Inc (茂迪科技) and Neo Solar Power Corp (新日光能源) were reportedly in intensive talks for a merger of the two companies, the Chinese-language Economic Daily News reported yesterday.

Both Motech and Neo Solar denied the merger talks in their separate statements to the Taiwan Stock Exchange.

SAS last week said it swung into profit in September from August due to strong contribution from GlobalWafers.

However, the company still reported a net loss of NT$318 million (US$10.9 million) in the July-to-September quarter, or a net loss per share of NT$0.68.

SAS president Doris Hsu (徐秀蘭) told investors last week she was upbeat about the solar industry’s prospects for this quarter, citing that the trade war between China, the EU and the US is likely to push the industry to bottom out faster while benefiting solar firms in Taiwan.

Grand Cathay Investment Services Corp (大華投顧) analyst Rickey Lin (林君曄) yesterday said he predicted the company would post a narrower net loss for this quarter on a lukewarm recovery in the solar market and an improved performance at Covalent Materials.

SAS is expected to report a net loss of NT$251 million this quarter, or a net loss of NT$0.48 per share, on revenue of NT$4.74 billion, down 13.7 percent from the third quarter, Lin said in a note.