Taipei District prosecutors said yesterday that if there was any evidence of insider trading in the merger between Chi Mei Optoelectronics Corp (奇美電子) and Innolux Display Corp (群創光電), they would press charges.
Speculation of insider trading has been rife since the two companies announced their merger plan on Saturday.
Chi Mei’s trading volume spiked to 142 million shares on Thursday and 184 million shares on Friday, four times and five times higher respectively than its average daily turnover of 34.7 million shares in the first eight trading days of the month, data on Taiwan Stock Exchange Corp’s (TWSE) Web site showed.
Chi Mei sent the exchange a statement on Friday denying media reports about a planned merger with Innolux.
Prosecutors said the Financial Supervisory Commission was seeking evidence of irregular trading.
If there was enough evidence, prosecutors could launch an investigation into violations of the Securities Exchange Act (證券交易法).
The Taiwan Stock Exchange said yesterday that it had asked Chi Mei to explain why it strongly denied merger plans on Friday only to announce the sale the following day.
“We have sent a statement to Chi Mei this morning asking them to explain the discrepancy,” exchange vice president Stanley Chu (朱士廷) said. “Their denial on Friday was clearly misleading.”
“We will also check if the companies made the decision in strict accordance with laws, such as whether it was decided by the board members or simply by their [chairmen],” he said.
The deal also boosted buying in the broader market yesterday, with Chi Mei closing up 6.91 percent to close at NT$20.10 and Innolux ending 2.98 percent higher at NT$48.40.
Meanwhile, Innolux Display announced yesterday that it would proceed with a NT$48 billion (US$1.5 billion) syndicated loan to be signed today.
The Miaoli-based company expects to sign a five-year loan from 19 banks, led by Mega International Commercial Bank Co (兆豐國際商銀), spokesman Jimmy Chiu (邱建銘) said by telephone.
After Innolux and Chi Mei announced their merger, Chiu said on Saturday that the syndicated loan might be delayed if terms needed to be changed to reflect the new entity.
The loan will proceed, though the use of funds may alter after the combined company’s capacity needs are reassessed after the merger, Chiu said.
He was unable to give a timeline for when a decision on expansion would be made.
However, some of the funds would be used to expand capacity at Innolux’s sixth-generation liquid-crystal display factory to 120,000 sheets per month from 50,000. The rest would be used to boost working capital to buy components for making LCD TVs.
Chi Mei has one sixth-generation factory with monthly capacity of 105,000 glass sheets and a larger 7.5 generation plant that can make 100,000 sheets. The company has said an 8.5 generation facility, its biggest, would be completed by the end of year.
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