Chinese Semiconductor Companies Said to Weigh Bids for Stats

Aug 27, 2014 5:40 am ET

(Updates with Stats closing price in fourth paragraph.)

Aug. 27 (Bloomberg) -- Chinese chip-testing companies Jiangsu Changjiang Electronics Technology Co. and Tianshui Huatian Technology Co. are considering bids for Singapore’s Stats Chippac Ltd., said people familiar with the matter.

The two companies are working on offers after unprofitable Stats Chippac, valued at S$1.3 billion ($1 billion) at yesterday’s close, said it had received takeover approaches, the people said. They asked not to be identified because the deliberations are confidential. A deal for Stats Chippac could be reached early next month, one of the people said.

Semiconductors is a strategic industry needed for China’s economic development and national security, the official Xinhua News Agency said in June, citing a plan issued by the State Council. China will increase financial support for the industry and plans to set up a national investment fund, Xinhua said.

Stats Chippac shares jumped 9.1 percent on the news to a three-year high, the biggest gain since June 26. Trading volume was almost six times the daily average over the past six months.

Stats Chippac, the fourth-largest provider of semiconductor testing and assembly services by sales, narrowed its loss in the second quarter as sales rose. The company, majority owned by Singapore’s state investment firm Temasek Holdings Ltd., said in June that it ended talks with one party while discussions with other potential bidders were continuing.

Changjiang Chairman Wang Xinchao didn’t answer two calls to his mobile phone seeking comment. Stephen Forshaw, a spokesman for Temasek, declined to comment in an e-mail. Officials at Tianshui Huatian and Stats Chippac weren’t reachable.

Private Placement

Shares in Stats Chippac have jumped 71 percent since mid- May, when the company first announced it had received an approach. Advanced Semiconductor Engineering Inc., the world’s biggest chip assembler and tester, had previously considered an acquisition, according to people familiar with the matter. An official at Advanced Semi declined to comment.

Changjiang said Aug. 25 it won approval from the Chinese securities regulator to sell as many as 235 million shares in a private placement. At yesterday’s closing price, such a sale would raise as much as 2.5 billion yuan ($407 million), data compiled by Bloomberg show.

A purchase of Stats Chippac would add to the $31.1 billion of semiconductor deals announced worldwide in the past year, data compiled by Bloomberg show, and would further China’s goal of bolstering its technology industry. Changjiang has a market capitalization of 9 billion yuan, while Huatian is valued at 8.1 billion yuan.

Temasek acquired a majority holding in Stats Chippac in May 2007. The investment firm paid S$1.75 per share for an 83 percent stake.

--With assistance from Klaus Wille in Singapore.