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January 6, 2007 1:55 am

Taiwan relaxed over Carlyle’s bid for ASE

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Taiwan on Friday signalled that it would not stand in the way of Carlyle Group’s $6.4bn bid for Advanced Semiconductor Engineering, the world’s largest chip testing and packaging company.

The stance by the Financial Supervisory Commission, the financial regulator, should further encourage buy-out funds to seek targets in Taiwan and comes as the watchdog is finalising rules to govern private equity.

The FSC on Friday said that talks with Carlyle on technical details of the deal were going smoothly and it expected Carlyle to submit its investment proposal for government approval next week.

The private equity firm in November expressed its interest in acquiring ASE at T$39 a share and said Jason Chang, ASE’s single largest shareholder and chairman, had already agreed to roll his 18.4 per cent stake into a Carlyle-controlled holding company that would own ASE.

Wu Tang-Chieh, head of Taiwan’s Securities and Futures Bureau, said on Friday: “Carlyle has already set up a local company in Taiwan which according to its plans would merge with ASE.”

Susan Chang, deputy chairwoman of the FSC, said: “Our understanding from our talks with Carlyle is that they will apply for approval with the [cabinet-level] Investment Commission next week.”

A source familiar with the situation confirmed that the deal was moving forward. “This is the first transaction of this type in Taiwan,” he said. “The key is that they are showing a welcoming attitude, and there’s no more than a little fine-tuning around the edges regarding technical details.”

As private equity funds are showing strong interest in Taiwan, the FSC and other government institutions are working on new rules to regulate the industry better. But the regulator is reluctant to introduce restrictions on the ASE deal individually.

Ms Chang said that the new rules, which would then apply to all future private equity deals, were likely to require the target companies to keep their debt ratios below a certain ceiling post-buy-out.

Carlyle declined to comment. Goldman Sachs, which advises Carlyle on the transaction, also declined to comment.

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