April 17, 2007 – In an abrupt about-face, the investor group seeking to snap up Taiwanese packaging services firm Advanced Semiconductor Engineering has called off its pursuit, with both sides apparently unable to agree on a final pricetag.
ASE says the consortium led by the Carlyle Group notified the company that it would withdraw its plans, originally announced last November, after an increased offer of NT$39.50/share (about US$1.19/share), up incrementally from the original NT$39/share offer. ASE’s committee to evaluate the proposal said the new price “did not reflect the value of the company,” and the committee told both the consortium and its board of directors “that it would not support a transaction at the proposed offer price.”
The Carlyle-led consortium’s $5.5 billion proposal launched in November was interpreted as a possible move to accelerate the company’s expansion into China, by relisting offshore and avoiding Taiwanese trade restrictions with the mainland. The Carlyle Group, which was also involved in deals earlier in 2006 for Freescale Semiconductor and Jazz Semiconductor, later offered an olive branch to the Taiwan government, applying to the Investment Commission and the Ministry of Economic Affairs (MOEA) to establish a Taiwanese subsidiary that would purchase shares of packaging/testing firm ASE Inc., as a token to help gain government approval for the acquisition, according to the Taiwan Economic News.
The Associated Press quoted one investor as unsurprised by the failed pursuit, given Carlyle’s lowball initial bid. “We believe that the private equity fund, which is interested in privatizing ASE, has to raise its bid by 10%-15% if it is to gain the support of its existing shareholders,” noted Bear Stearns Asia Ltd. analyst Roxy Wong.