ASE shares extend gains ahead of new merged firm listing

2018/04/16 14:17:04 fontsize-small fontsize-default fontsize-big
ASE shares extend gains ahead of new merged firm listing

Taipei, April 16 (CNA) Shares of Advanced Semiconductor Engineering Inc. (ASE), the world's largest integrated circuit packaging and testing services provider, extended momentum Monday ahead of a listing of a new combined firm scheduled for April 30, dealers said.

The current buying reflected investors' optimism toward the outlook of the combined company between ASE and Siliconware Precision Industries Co. (SPIL) on hopes that the new company, which will be called ASE Industrial Holding Co., will cement its lead over its peers in the global market, the dealers said.

Shares of ASE gained 2.59 percent to close at NT$45.50 (US$1.55) with 84.02 million shares changing hands on the Taiwan Stock Exchange, while shares of SPIL ended up 0.20 percent at NT$51.00. Monday's gains came after the stock's 4.11 percent increase seen Friday.

ASE shares outperformed the broader market, where the weighted index closed down 0.10 percent at 10,954.55 in reflection of Wall Street weakness Friday.

The new ASE is scheduled to list its shares on the local main board and the tech-heavy NASDAQ in the United States April 30, and before the listing, the final trading session for ASE and SPIL in Taipei and the U.S. has been set for Tuesday.

The delisting of both ASE and SPIL and the listing of the new ASE were scheduled after China's Ministry of Commerce cleared an anti-trust review on Nov. 24, 2017.

China's approval came after Taiwan's Fair Trade Commission and the U.S. Federal Trade Commission issued approval on the combination on Nov. 16, 2016 and on May 15, 2017, respectively.

In May 2016, ASE and SPIL announced that they planned to form a holding company that will own 100 percent stakes in both of the two companies, and that the two will remain independent from each other, although their operations will continue under the same roof of the holding company.

Under the deal, ASE will use one common share in exchange for 0.5 shares of the new company, while shareholders of SPIL will receive NT$51.2 in cash per share for the stakes they hold from ASE. In February, ASE and SPIL held a special shareholder meeting to vote for the merger proposal.

In a research note, a U.S. brokerage said it is upbeat that the merger between ASE and SPIL will create synergies for the new ASE, forecasting that earnings per share of the new company will hit NT$6.33 in 2018, higher than the combination of the two companies in 2017.

In 2017, ASE's and SPIL's EPS stood at NT$2.82 and NT$2.21, respectively.

The U.S. securities house said it is possible for ASE shares to challenge the NT$50 mark before the stock's delisting.

A European brokerage said the new ASE is expected to take advantage of larger economies of scale in production and a cut in production costs to boost competitiveness of the combined firm in the global semiconductor market, which is forecast to grow 8-10 percent over the next few years.

(By Chung Jung-feng and Frances Huang)

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