Advanced Semiconductor Engineering (ASE) and Siliconware Precision Industries (SPIL) jointly announced on June 30 they have officially entered into a merger agreement reached on May 26.

The merger is expected to complete by the fourth quarter of 2017, subject to approval by competent authorities of the concerned countries, approval by ASE's and SPIL's shareholders, as well as the satisfaction of other conditions precedent.

If the transaction fails to complete by December 31, 2017, the deal "shall be terminated automatically at 0:00 on the day immediately following, unless otherwise agreed in writing," according to a joint statement issued by ASE and SPIL.

A holding company will be established to own both ASE and SPIL, which will become parallel sibling companies under the new entity tentatively named ASE Industrial Holding. After transferring ownership to the holding company, ASE and SPIL will still be able to maintain their separate legal entity status and run operations independently.

Under the terms of the agreement, each ASE share will be swapped for 0.5 shares of the holding company, while the holding company will pay NT$55 (US$1.69) in cash per SPIL share. The cash consideration of NT$55 has been adjusted to NT$51.20 after excluding SPIL's 2016 distribution of a NT$2.80 cash dividend and a NT$1 per share payment from capital reserves. "The NT$51.20 cash consideration aforementioned will not be subject to further adjustment if cash dividends distribution by SPIL in 2017 are less than 85% of SPIL's after-tax net profit for the year 2016," according to the statement.

The new holding company will trade its shares on the Taiwan Stock Exchange and the New York Stock Exchange, while shares of ASE and SPIL will all be delisted.

By: DocMemory
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