ôThere was a difference of opinion between the parties on the fair valuation of the company,ö vice president of ASE, Freddie Liu, tells FinanceAsia.
On November 24 last year, Carlyle announced that it would act in concert with ASE founder and CEO, Jason Chang, to buy-out all minority shareholders and take the company private. Carlyle offered NT$39 ($1.19) per share which suggested an equity value for the Taiwanese semiconductor testing company of around $6 billion.
But the deal, which was expected to be the pre-cursor to a wave of private equity deals in Taiwan, raised questions almost from the time it was announced.
The pricing was tight at a 10% premium to the traded share price of NT$35.50 back in November and a 23.5% premium to the 30-day average closing price. The proposed delisting seemed difficult to achieve at this pricing. At the time, analysts had speculated Carlyle might increase its offer, which it eventually did. "Carlyle raised its offer to NT$39.50," says Liu.
There were also questions hanging over regulatory approvals for the deal. Initially it seemed local regulators had backed the deal, but when specialists suggested that the deal was a way for ASE to get a back-door entry into China, there were doubts that Taiwan would support such a strategy.
ASEÆs Liu says only: ôFinal regulatory approval has still not been receivedö.
In February, Carlyle and Chang announced that exclusivity, break-up and expense-reimbursement agreements between them were called off. Some analysts felt that this left Chang free to try to peddle his 18.4% stake to a higher bidder.
ASEÆs Liu clarifies that this step was ôstandard procedure to facilitate the evaluation processö. ASEÆs board appointed an Evaluation Committee in February to review the deal. At the same time, it announced Morgan Stanley as its financial advisor.
And now Carlyle has announced that it will not pursue the deal, saying in its April 17 New York Stock Exchange (NYSE) filing: ôwe have not been able to reach agreement on the offer priceö.
ASEÆs shareholders in Taiwan cheered the news on April 18, pushing the share price up 3.2% to NT$42.30, a seven-year high. Holders of the NYSE-listed GDRs were more cautious but even these gained 0.8%. Analysts suggest ASE could be on the radar screen of other financial sponsors, given the interest in the semiconductor space.
Carlyle was represented by Goldman Sachs on the offer. ASE was advised by Morgan Stanley. Carlyle, Goldman Sachs and Morgan Stanley had no comment.
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