ASE offered $US5.5 billion in latest chip buy out

A private equity group may offer to buy ASE in a $US5.5 billion deal

A private equity group may offer to buy the world's largest chip assembly company, Taiwan's Advanced Semiconductor Engineering (ASE). The move follows a wave of big deals in the chip sector.

The Carlyle Group is leading a consortium of investors offering around $US5.5 billion ($7 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 for $US17.6 billion ($22.5 billion), while Koninklijke Philips Electronics NV sold a majority in its chip unit to another group for around $US10.6 billion ($13.6 billion).

In addition, microprocessor giant, Advanced Micro Devices, bought graphics chip maker, ATI Technologies, earlier this year, while Nvidia said it planned to buy digital music chip maker, PortalPlayer.

Analysts speculate that chip fever isn't over, either. Chip foundry giant, United Microelectronics, 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 privatise the firm. The group interested in ASE plans to offer $US1.18 per Taiwanese share of the company, or $US5.94 per US-listed share. ASE Enterprises and the chairman of ASE, which together hold 18.4 per cent of ASE's shares, have both joined the consortium led by Carlyle.

The deal would also require regulatory approval and shareholder approval before being finalised.

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