China’s Unigroup May Drop Deals with Taiwanese Companies as Government Approval Deemed Unlikely

30 Nov

As the government of Taiwan is seen unlikely to approve Beijing-backed Tsinghua Unigroup’s plan to acquire stakes in Powertech Technology Inc. (PTI) and ChipMos Technologies Inc. (ChipMos), two major IC packaging and testing companies, the Chinese company does not rule out the possibility to drop the deals and seek other channels of cooperation, Chinese media reported.

Taiwan’s Investment Commission under the Ministry of Economic Affairs received the application early this year and has not given a green light. China’s government-run Unigroup made headlines in 2015 when it proposed to acquire a 25 percent stake in Taiwan’s Siliconware Precision Industries Co. (SPIL), PTI and ChipMos.

SPIL and another Taiwanese company, Advanced Semiconductor Engineering Inc. (ASE), are in the final stages of a merger and will not proceed with the deal with the Chinese group.

Unigroup signed the agreements to purchase the shares with PTI and ChipMos early this year. According to a recent report by China’s National Business Daily, as uncertainty grows on Taiwan’s side regarding the government approval, Unigroup may terminate the deal and seek other possibilities.

The report said Unigroup offered to buy a 25 percent stake in PTI and ChipMos with NT$31.4 billion (US$985.55 million). The Chinese group signed the agreements with PTI and ChipMos in January and February this year, respectively. The agreements were to be valid for a year.

As the government decision is still pending, the possibility that the acquisitions would be approved after the validity of the agreements runs out is very low. In addition, the decisions made by the two Taiwanese companies’ shareholders conferences — to sell the shares to Unigroup will also cease to be valid soon, generating more uncertainties around the deals.
(Photo courtesy of Tsinghua Unigroup).