An Open Letter to SPIL Shareholders from ASE (No. 3)
To Our Honorable Fellow SPIL Shareholders:
As a follow-up to the letters Advanced Semiconductor Engineering, Inc. (“ASE” or “we”) sent to you on September 28, 2015 and October 1, 2015, we would like to provide a few updates in connection with the upcoming extraordinary shareholders’ meeting of Siliconware Precision Industries Co., Ltd. (“SPIL”) on October 15, 2015 (“EGM”).
Our reasons for opposing the EGM proposals have been explained in our earlier letters to you. We would like to highlight that ASE is not the only one that opposes the proposals to be voted upon at the EGM.
Over the past few days, as reported in the media, both Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co., LLC (“Glass Lewis”), two of the world’s foremost proxy advisors, have recommended that shareholders vote AGAINST the proposals to be voted on at the EGM. The recommendations of ISS and Glass Lewis are extremely highly regarded and routinely followed in the United States and elsewhere by institutions that follow best practices in corporate go vernance.
As quoted in the media, here are a few of the reasons that ISS and Glass Lewis recommend that shareholders vote against the EGM proposals:
- “the board has not provided valid justifications regarding the necessity of share exchange for the formation of strategic alliance or the absence of premium for the share exchange pricing with Hon Hai”
- “in determining possible control premium relating to the share exchange ratio, SPIL’s management seems to apply a double standard. SPIL strongly criticized ASE’s tender offer based on the argument that ASE did not take into account the control premium [for the fair value of SPIL’s share] in determining the tender offer price. However, such control premium was not added in the pricing of SPIL’s shares to be issued under the share exchange with Hon Hai”
- “the proposed share exchange ratio for SPIL to issue 2.34 shares in exchange for 1 Hon Hai share is at a deep discount and Hon Hai will obtain a unreasonably large portion of SPIL’s stake. Such an outcome could be unduly dilutive to shareholders’ interests”
- “the implied valuation of SPIL’s shares to be issued to Hon Hai is not only 23.5% below ASE’s tender offer price, but also 29.6% below the valuation provided in SPIL’s fairness opinion”
- “Although SPIL stated that through the share exchange with Hon Hai it may increase the company’s capital reserve for earning distribution and increase dividend payout in the future, such measure will not increase SPIL’s cash position”
- “SPIL’s strategic alliance with Hon Hai in the form of a share exchange is not presented as a separate voting agenda, but instead is bundled through the amendments to the SPIL’s Articles of Incorporation and Procedures for Acquisition and Disposition presented as the voting agenda for this meeting. To SPIL shareholders, such structure poses risks arising from the lack of disclosure and granting excessive board authorization to SPIL’s board”
- “the structure of the voting agenda poses go vernance-related risks to shareholders. Under the current structure, shareholders are unable to fully assess the potential impact of the transaction in order to make a correct decision”
- “such an amendment to the bylaws is not a one-time authority; rather, it would authorize SPIL’s board to conduct transactions similar to the Hon Hai share exchange up to the newly expanded share issuance limit in the future without shareholders’ approval”
- “SPIL decided to enter into a share exchange with Hon Hai just one week after ASE announced its intention to commence a tender offer… absent reasonably extenuating circumstances, Glass Lewis does not support actions by companies that are blatant attempts at implementing anti-takeover defenses”
For the above reasons, if you held SPIL shares on September 15, 2015, we urge you to attend the EGM to exercise your shareholder rights and vote “AGAINST” the proposed amendments to SPIL’s Articles of Incorporation and the proposed amendments to SPIL’s Procedures for Acquisition and Disposition.
Wishing all SPIL shareholders go od health and all the best,
Advanced Semiconductor Engineering, Inc.
About ASE, Inc.
ASE, Inc. is the leading global provider of semiconductor manufacturing services in assembly and test. Alongside a broad portfolio of established assembly and test technologies, ASE is also delivering innovative advanced packaging and system-in-package solutions to meet growth momentum across a broad range of end markets, including 5G, AI, Automotive, High-Performance Computing, and more. To learn about our advances in SiP, Fan-out, MEMS & Sensor, Flip Chip, and 2.5D, 3D & TSV technologies, all ultimately geared towards applications to improve lifestyle and efficiency, please visit: aseglobal.com or follow us on Twitter: @aseglobal.