Advanced Semiconductor Engineering Inc’s (ASE, 日月光半導體) attempt to take over Siliconware Precision Industries Co (SPIL, 矽品精密) is heating up, with ASE asking SPIL shareholders to reject a plan to issue new shares and swap with Hon Hai Precision Industry Co (鴻海精密).
The Kaohsiung-based chip packager and tester made the request on Monday through a public letter, the latest effort to block a SPIL-Hon Hai alliance after ASE chairman Jason Chang (張虔生) objected to the plan after a meeting with SPIL chairman Bough Lin (林文伯) last week.
Chang said the deal would undermine ASE’s position as a SPIL shareholder.
ASE is set to become the largest single SPIL shareholder after a NT$35 billion (US$1.05 billion) transaction to buy a 25 percent stake from SPIL’s shareholders is completed later today.
In the latest of a slew of public letters to its shareholders, SPIL on Monday asked investors to support its plan to increase its authorized share capital from 3.6 billion shares to 5 billion, allowing it to issue 840 million new common shares for Hon Hai for a share swap.
SPIL’s 27-page letter said the company needs to raise the cap on a single investor’s stake from 20 percent to 60 percent of its net worth to facilitate the swap scheme.
Hon Hai would account for between 43.2 percent and 52.9 percent of SPIL’s net worth after the share swap, according to SPIL’s calculations.
However, ASE said in its letter that the proposal would “seriously jeopardize the foundation and opportunities for ASE to seek legal avenues of cooperation with SPIL in the future.”
The increase would “far exceed” 840 million new shares SPIL would need to issue for Hon Hai, ASE said, adding that SPIL’s board might also undertake other actions to complete the swap, further diluting all SPIL shareholders’ equity.
ASE also accused SPIL’s management of depriving it of the right to vote against the proposal, as SPIL, after signing a non-binding letter of intent with Hon Hai, picked Oct. 15 for an extraordinary meeting — with a Sept. 15 registration date — to disqualify ASE from being able to cast its vote.
However, SPIL said that it does not plan to issue more new shares or introduce additional investors in the near future, aside from the planned deal with Hon Hai.
It reiterated that strategic cooperation with Hon Hai would be a major growth driver for its revenue and profit, as the two companies would jointly expand their business to the rapidly growing system-in-a-package (SiP) market.
SPIL expects to take a meaningful share of the world’s SiP market in 2018, when the market is projected to expand to US$40 billion, it said in its letter.
SiP technology is most notably used in supporting Apple Inc’s iPhone’s fingerprint identification feature.
Hon Hai is a major assembler of iPhones.
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