ASE shares soar on merger approval; company to raise wages

Taipei-Shares of Advanced Semiconductor Engineering Inc. (ASE), the world’s largest integrated circuit packaging and testing services provider, climbed sharply in mid-morning trade Monday after the company obtained conditional approval from China for a merger with Siliconware Precision Industries Co. (SPIL), dealers said.

ASE also announced over the weekend that it was planning to raise wages at its flagship production base in Kaohsiung by 3-5 percent and hire about 1,000 new workers as part of its expansion plans.

As of 10:53 a.m. Monday, shares of ASE had risen 8.83 percent to NT$41.90 (US$1.40) with 116.56 million shares changing hands. The buying also extended to Siliconware, whose shares were 3.41 percent higher at NT$50.10.

The two stocks were outperforming the broader market, where the weighted index was down 0.67 percent at 10,781.60 points. The drop was led by Taiwan Semiconductor Manufacturing Co. (TSMC), whose shares had fallen 2.50 percent to NT$239.00 after a target price downgrade by a U.S. brokerage.

“It’s no surprise that ASE and Siliconware got a boost on Monday following China’s approval (of the merger),” Hua Nan Securities analyst Henry Miao said. “The upturn simply followed a jump of the two stocks’ American depositary receives (ADRs) on Friday after the news of the approval broke.”

Miao said, however, that the two stocks’ current share prices are likely to be short-lived due to technical resistance.

On Friday, ASE’s and Siliconare’s ADRs soared 12.04 percent and 5.29 percent, respectively, on the U.S. market after China’s Ministry of Commerce issued conditional approval for the two companies to set up a holding company.

China’s approval came after Taiwan’s Fair Trade Commission and the U.S. Federal Trade Commission gave approval on Nov. 16, 2016 and May 15, 2017, respectively, for the merger.

ASE said the merger plan now has all the necessary regulatory approval and the two companies have scheduled special shareholder meetings for February as they proceed with the matter.

In May 2016, the two companies announced plans to form a holding company that will hold a 100 percent stake in both ASE and Siliconware, but said the newly established firms will remain independent of each other, although their operations will be conducted under the corporate umbrella of the holding company.

The holding company is expected to be set up by May 2018, according to ASE’s plan.

In addition to a request for ASE and Siliconware to function independently under the holding company, China’s conditions for the merger include limited shareholder rights for the holding company to receive bonuses and financial data from both companies.

On Sunday, ASE announced that it planned to raise pay for its production line workers, technicians, engineers, administrative staff and managers in Kaohsiung, effective January, based on their performance.

ASE also said it would hold a job fair in Kaohsiung on Dec. 23 to recruit about 1,000 engineers and production line workers.

Source: Focus Taiwan News Channel