Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) yesterday cleared the final regulatory hurdle to merge with rival Siliconware Precision Industries Co Ltd (SPIL, 矽品精密) in a deal worth about NT$128 billion (US$4.27 billion) after receiving conditional approval from Chinese regulators.
China’s permission paves the way for ASE to take the merger deal to the next stage, although about five months behind its original plan.
“As ASE and SPIL have now received all necessary anti-trust clearances for the transaction, ASE will immediately proceed with the establishment of a holding company,” the companies said in a joint statement.
Photo: Chu Pei-hsiung, Taipei Times
The Kaohsiung-based chip testing and packaging services provider plans to create the holding company by the end of May next year after ASE and SPIL shareholders vote on the merger at extraordinary meetings scheduled for February, the statement said.
The holding company, ASE Industrial Holding Co (日月光投資控股), would fully own ASE and SPIL, which are to remain separate legal entities, it said.
The holding company would be listed in Taiwan and the US, and ASE and SPIL would continue to expand their investments in Taiwan, it added.
“ASE and SPIL are aware that certain authorities and industry players in China might have concerns over the potential restrictive effects of the [deal],” the companies said. “In order to mitigate such concerns, ASE and SPIL filed a remedial proposal with the [Chinese] Ministry of Commerce’s Anti-Monopoly Bureau that included the companies’ commitments to maintain independent operations for a limited period.”
According to information posted on the ministry’s Web site, over the next 24 months ASE and SPIL are to operate independently, meaning they would not be allowed to share sensitive information such as pricing, sales strategies, input capacity and raw material sourcing.
“The anti-monopoly investigation shows that ASE and SPIL have overlapping businesses horizontally, as both are leading companies in the world’s semiconductor packaging and testing industry,” the ministry said in a statement.
The ministry said it is concerned that the merger would further lift ASE’s market share, which would give it greater power to adjust pricing strategies that might hinder market competition and exclude potential newcomers.
That could ultimately damage the interests of its clients and consumers, it added.
After the transaction, ASE, the world’s biggest chip tester and packager, would see its market share climb to between 25 percent and 30 percent share, the ministry said.
Separately, SPIL said last night that it has agreed to sell a 30 percent stake in its subsidiary located in Suzhou to China's Tsinghua Unigroup Ltd (清華紫光) for 1.026 billion yuan (US$155 million).
SPIL said the transaction is expected to help the company tap the fast growing Chinese market, while the proceeds will be used to expand its production capacity in Taiwan.
Additional reporting by CNA
This story has been updated since it was first published.
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