Temasek subsidiary Singapore Technology Semiconductors said Thursday it would pay $1.14 per share for the 64.4 percent of STATS ChipPAC that it doesn't already own, rising to $1.23 per share if its final stake exceeds 90 percent.

The offer, which is conditional on Temasek obtaining at least half of the company, represents an 18.2 percent premium on its most recent share price.

Though both parties are declining to comment on the bid, Temasek said in its announcement that it wanted to buy STATS because it was a "long-term shareholder ... and continues to believe in the prospects of the company."

Industry observers said Temasek's move was well timed given STATS's strong recent performance and prospects. After a prolonged period in the red brought on by the merger that created the company in 2004, STATS posted a $76.8 million profit for 2006, and saw revenues jump nearly 40 percent to $1.6 billion.

STATS "has really cleaned itself up," said ABN AMRO analyst Edwin Goh, who believes the firm's leadership in areas like stacked die packaging and expansion into markets such as China paint a "rosy picture" for its future.

Goh said STATS's efforts to carve out a niche in the leading edge of the packaging market could stand to benefit from Temasek's "deep pockets." But he also noted that if the company stays public, long-suffering investors would probably want to see some money spent on dividend payments.

"In this sense [the offer] perhaps should be higher" and the bid could face some resistance, Goh added.

The offer for STATS is further evidence of the rising interest of private equity firms in major semiconductor industry players. In November 2006, the Carlyle Group offered $5.46 billion for Taiwan's Advanced Semiconductor Engineering, but the deal has yet to close. Other firms, such as Freescale Semiconductor and NXP Semiconductor, have also been scooped up by private equity.

By: DocMemory
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