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STATS shareholders dodge private-equity buyout

Posted: 22 May 2007 ?? ?Print Version ?Bookmark and Share

Keywords:STATS shareholders? private equity? shares buyout?

Temasek Holdings' buyout plan of Singapore-based STATS ChipPAC did not push through as it fell short of the 90 percent share needed to make the test and assembly house private.

According to a statement from Temasek, its subsidiary Singapore Technologies Semiconductor (STS) had acquired 46.4 percent of the outstanding shares in STATS as well as over $134 million in convertible notes due in 2008. That brings its total stake in STATS to 83.1 percent. STS was offering $1.15 per share, but was prepared to pay $1.23 if it acquired the 90-percent stake needed to take out the firm from the Singapore Exchange and the Nasdaq.

Few signs of disappointment were evident in a statement from Tow Heng Tan, Temasek's senior managing director of investment. He said Temasek was "happy to have succeeded in increasing our stake in" STATS.

Still, the bid provoked a struggle between Temasek and minority shareholders, including New York-based OZ Management and U.K.-headquartered Marathon Asset Management, which owns 6.62 percent of STATS and repeatedly insisted it was not prepared to sell its stake.

STATS warned last week that when taking the funds' holdings into account, the percentage of its ordinary shares in public hands could drop below 10 percent, which would have prompted Singapore regulators to suspend trading in the firm. STATS later retracted the statement after OZ Management confirmed it reduced its stake in the company from 5.78 to 1.87 percent last month.

Some observers said the $1.6 billion deal, which represented an 18 percent premium on STATS' share price at the time of the offer, also sold the company short given its strong recent performance. After a patch in the red resulting from the merger that created it in 2004, STATS posted a $76.8 million profit last year. Net income soared over 40 percent in the first quarter to $17 million.

Carey Wong, an analyst at OCBC Investment Research, said in an April 26 research note that STATS' results and a "more upbeat outlook for the chip testing sector" made it inevitable that "some investors may be more reluctant to accept [STS's] offer."

- Jonathan Hopfner
EE Times

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