Carlyle launches $5.4bn Taiwan tech offer

The US buyout firm is stepping up its exposure to the semiconductor industry with a bid for the Taiwanese microchip packager Advanced Semiconductor Engineering.

The Carlyle Group, a US private equity firm, is planning a $5.4bn (€4.1bn) offer for the world’s biggest microchip packager, a month after taking part in the world’s largest technology buyout.

The buyout firm said it plans to make an all-cash offer for Taiwan’s Advanced Semiconductor Engineering.

The offer follows Carlyle’s participation in the $17.6bn (€13.4bn) acqusisition of Freescale, a US semiconductor company, alongside The Blackstone Group, Permira and Texas Pacific Group.

In a statement Carlyle said Advanced Semiconductor chairman Jason Chang was backing the bid with his 18.4% stake in the company.

The offer is at a 23.5% premium on Advanced Semiconductor’s average share price over the past 30 days, according to Carlyle.

The semi-conductor industry’s popularity with buyout firms is concerning some technology veterans. Paul Deninger, chairman of boutique US technology bank Jefferies Broadview, said at a conference in October the amount of leverage going into semiconductor buyouts, a sector renowned for its cyclicality, scared the hell out of him.

He said the deal to take Freescale private had almost as much debt in it as the entire Philadelphia stock exchange SOX Index, made up of 19 semiconductor companies and with a combned market cap more than 20 times that of Freescale.

The Freescale deal came a month after a consortium of Kohlberg Kravis Roberts, Silver Lake Partners, Bain Capital and Apax Partners acquired a majority stake in Dutch conglomerate Philips’ semiconductor business for €8bn ($10.5bn).