Advanced Semi confirms takeover bid from Carlyle

A private equity consortium led by the US equity investment firm Carlyle Group on Friday unveiled its plan to buy computer chip testing and packaging firm Advanced Semiconductor Engineering (ASE) for $5.5 billion.

The offer price is equal to about 179 billion Taiwan dollars, or 35.5 Taiwan dollars a share.

The potential Carlyle bid, at T$39 per common share or $5.94 per American depositary receipt, represents a 10 per cent premium to ASE's Friday closing price of T$35.5 a share, and values the firm at about T$179 billion or US$5.46 billion.

In a press release yesterday, the Taiwan- based Advanced Semiconductor Engineering also confirmed that Jason Chang, ASE’s chairman is in talks with the well-connected, Washington-based Carlyle Group. However, the company said it had not yet approved a bid.

"Discussions between ASE and the consortium have not been completed, and there can be no assurance that an offer will ultimately be made by the consortium or what the ultimate terms of such an offer would be," ASE said.

Chang and his affiliated holding company, ASE Enterprises Ltd., hold about 18.4% of ASE.

In a separate interview, company spokesman Freddie Liu said, “We have received the indication of the offer form Carlyle, and our chairman has agreed with the offer,” adding further that “We still need to seek approval from other shareholders.”

ASE is considering Carlyle’s move as a leverage to transform the firm into a foreign company, enabling the company to break into the China market. Currently, ASE is restricted by Taiwanese law to trade or invest in China.

Since the end of China's Civil War in 1949, Taiwan has suspended contacts with China. Although it started indirect trade with China in the late 1980s, but did not allow high-tech companies to invest there. The latest bid, if gets approval, will enable the company to invest in China openly.

Greg Zeluck, co-head of Asia buyouts of Carlyle Group, in a statement, said, “We believe a potential acquisition of this nature illustrates Carlyle’s tremendous confidence in Taiwan.”

“If completed, it will reinforce Tawain’s status as a first-rate international financial center and a key destination for global private equity capital.”

Private-equity groups have been on spree of buying publicly traded companies worldwide, as access to cash is comparatively easy with low global interest rates.

Run by Louis Gerstner, the former IBM chairman, Carlyle has been increasingly making investments in the semiconductor province. In September, the firm announced it was part of a consortium that was taking over Austin, Texas-based chip-designer Freescale Semiconductor for $17.6 billion.

The funds managed by The Carlyle Group, the leading provider of semiconductor packaging services also own Jazz Semiconductor, a Newport Beach, California based pure-play semiconductor wafer foundry, and the leading global supplier of electronic materials, AZ Electronic Materials.

The American depositary shares of ASE jumped over 15% or 80 cents to $6.06 in New York trading Friday.