The deal was called off after five months of negotiations between the world's largest chip tester and packager and the U.S.-based private equity firm. Carlyle announced its interest in buying all ASE stock in November 2006. This raised concerns that ASE was amenable to buyout by a foreign company as a means of circumventing the cap on China-bound investments by Taiwan-owned businesses. Despite such concerns, ASE's purchase of China-based Global Advanced Packaging Technology Ltd. was approved by Taiwan's Ministry of Economic Affairs at the end of 2006, with ASE also promising it would increase investment in Taiwan by US$3 billion.
The Carlyle-ASE deal was withdrawn because the two sides failed to reach consensus on the purchase price, ASE stated April 17. The company's evaluation committee disagreed with the US$1.20 per share offered by Carlyle. Although this price was subsequently raised 1 percent, the committee decided this did not reflect the value of the company. Its conclusion was passed to the board of directors and the consortium, after which Carlyle withdrew from the deal. In February, ASE had already terminated Carlyle's exclusive terms, thus allowing it to look for other buyers. ASE spokesperson Freddie Liu stated in an April 18 Chinese-language Economic Daily News report that the company had not been in contact with any other buyers so far.
ASE also claimed in the EDN report that the purchase failed out of consideration of its shareholders' rights. This would not affect the company's operations nor its investment plans in China, it added.
Investors showed optimism about the aborted deal, however. Roland Shu, an analyst at JP Morgan Chase & Co., said in the EDN report that, even though the purchase was unsuccessful, the outcome was advantageous to ASE. The ambiguous situation regarding the purchase had led to limited growth in ASE's share price over the past five months, Shu said.
ASE's share price had risen 18.5 percent since Carlyle announced its interest to buy the company, the Chinese-language Commercial Times reported April 18. This growth was small compared to that of other top integrated circuit packagers, such as the 49.5-percent rise of Taiwan-based Siliconware Precision Industries Co. Ltd. stock, 42.8-percent increase in U.S.-based Amkor Technology Inc. stock and 60.3-percent growth of Singapore-based STATS-chipPAC Ltd.'s share price.
According to figures from the Taiwan bourse, ASE stock price grew by 3.17 percent April 18 once the news of Carlyle's withdrawal had been made public, while Siliconware's stock fell 6.92 percent the same trading day.
The Financial Supervisory Commission confirmed April 17 that Carlyle had withdrawn its offer from the economic ministry's Investment Commission. It stated that the FSC would continue to respect the market mechanism with regard to foreign private equity firms' acquisitions in Taiwan.
Write to Annie Huang at shihyin@mail.gio.gov.tw