Carlyle plans bid in Taiwan
A private equity consortium led by Carlyle Group is planning to make a $5.5-billion bid for the world’s biggest microchip packaging firm, Advanced Semiconductor Engineering Inc., the companies said Friday.
At 39 Taiwanese dollars ($1.19) a share, the potential Carlyle bid represents a 10% premium to Taiwan-based ASE’s Friday closing price of 35.5 Taiwanese dollars a share and values the firm at about 179 billion Taiwanese dollars ($5.46 billion), according to Reuters data.
The U.S.-traded shares of ASE, which encases silicon chips in plastic packages so that they can be connected to circuit boards, rose nearly 15.2% to $6.06 in New York trading Friday.
The move is the latest sign of private equity interest in the chip industry, after Freescale Semiconductor Inc. agreed in September to a $17.6-billion leveraged buyout to a group that also included Carlyle.
Private equity firms, which look for steady cash flow and long-term growth prospects, are investing in the maturing semiconductor industry as it goes through a phase of slower but steadier growth.
“As a Carlyle-affiliated entity, ASE would be in a position to better take advantage of accelerating global outsourcing trends for semiconductor assembly and testing services,” Carlyle said in a statement.
The private equity firm said ASE would benefit from being under the same ownership as Carlyle’s other microchip properties, which include Toshiba Ceramics Co., Jazz Semiconductor Inc. and AZ Electronics.
ASE said its chief executive, Jason Chang, had agreed to roll his stake in the company into a bid by the consortium, subject to conditions. Chang and his affiliated holding company, ASE Enterprises Ltd., own about 18.4% of ASE.
The company said it had not 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 in a statement.
ASE counts ATI Technologies, Qualcomm Inc. and Freescale among its major clients. It competes with smaller Taiwan rival Siliconware Precision Industries Ltd., U.S.-based Amkor Technology Inc. and Singapore’s STATS ChipPAC Ltd.
Last month ASE said its third-quarter profit more than doubled on recovering chip demand, but it forecast weaker sales and falling profit margins in the fourth quarter.
Its forecast earnings per share for 2006 is 3.93 Taiwanese dollars, making the bid about 10 times forecast earnings.
Carlyle said its planned bid illustrated the firm’s confidence in Taiwan, where it has been an active investor since 1999. Its other investments there include Taiwan Broadband Communications and Eastern Multimedia Corp.
