A private equity group may offer to buy the world’s largest chip assembly company, Taiwan’s Advanced Semiconductor Engineering Inc. (ASE). The move follows a wave of big deals in the chip sector.
The Carlyle Group is leading a consortium of investors offering around US$5.5 billion to buy up all outstanding shares of ASE. The companies say an indication of interest has been made for ASE, including financial terms, but that a formal offer won’t be put forth until talks are finished. They gave no time frame for the deal.
If concluded, it would be the latest in a string of such deals in the chip industry. A few months ago, the Carlyle Group was part of a group that sealed a deal to buy Freescale Semiconductor Inc. for US$17.6 billion, while Koninklijke Philips Electronics NV sold a majority in its chip unit to another group for around US$10.6 billion.
In addition, microprocessor giant Advanced Micro Devices Inc. bought graphics chip maker ATI Technologies Inc. earlier this year, while Nvidia Corp. said it plans to purchase digital music chip maker PortalPlayer Inc.
Analysts speculate that chip fever isn’t over, either. Chip foundry giant United Microelectronics Corp. could be the next buy-out target, according to investment researcher CLSA Asia-Pacific Markets.
For users, these deals may ultimately result in higher-quality products. When Philips sold off its chip unit, executives said the move would free the division to innovate by removing headaches such as the pressure to meet quarterly earnings projections.
In the case of ASE, as with Freescale, the company’s stock would be purchased outright in order to privatize the firm. The group interested in ASE plans to offer NT$39 (US$1.18) per Taiwanese share of the company, or US$5.94 per U.S.-listed share. ASE Enterprises Ltd. and the chairman of ASE, which together hold 18.4 percent of ASE’s shares, have both joined the consortium led by Carlyle.
The deal would also require regulatory approval and shareholder approval before being finalized.
