Published May 29, 2009

Chartered soars on talk of $2.45 billion bid

Abu Dhabi outfit said to have made offer to Temasek

By JAMIE LEE

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(SINGAPORE) Shares of Chartered Semiconductor Manufacturing jumped as much as 9.36 per cent yesterday on talk that a takeover offer from a Middle East values it around $2.45 billion.

ATIC, set up last year, is a technology investment company owned by the Abu Dhabi government. It aims to own a 'diverse local and international portfolio of highly profitable investments in the advanced technology sector'.

BT understands the chip-maker has received a bid from Advanced Technology Investment Company (ATIC) to buy Temasek Holdings's near-60 per cent stake at between $2.40 and $2.60 a share.

The $2.45 billion price tag represents a 19 per cent premium to Chartered's market cap yesterday of $2.05 billion.

The stock surged to as high as $2.22 during the day before ending 7.39 per cent up at $2.18.

Temasek has declined to comment on the takeover talk.

ATIC, which was set up last year, is a technology investment company owned by the Abu Dhabi government.

It aims to own a 'diverse local and international portfolio of highly profitable investments in the advanced technology sector,' according to its website.

ATIC's connection with Singapore is not entirely new.

Globalfoundries - a joint venture between ATIC and Advanced Micro Devices - considered Singapore as the base for a US$4.2 billion wafer fab plant but eventually decided on New York, its chief executive Doug Grose told BT in March this year.

Singapore lost out to New York because the latter offered a stronger talent pool and financial incentives, despite lower labour costs here, Mr Grose said at the time.

But Globalfoundries - which will compete with Chartered and the other chip-makers - was considering setting up a sales, engineering and marketing unit in Singapore, he said. Other possible destinations include China and Japan.

A source told BT in early January that Temasek had held preliminary talks with suitors for Chartered but that poor market conditions dampened the possibility of a sale at an attractive price. There were also concerns over potential job cuts at that point, the source added.

At the end of January, Chartered said it would fire 600 workers worldwide, including 540 here. This represented 8 per cent of its total work force.

Amid worries over its debt, it also raised US$300 million from a rights issue announced in March.

Temasek backed the rights issue by subscribing to its pro-rata entitlement, as well as agreeing to buy up to 90 per cent of the offering if the rights shares were not subscribed. This included its undertaking to Chartered and the underwriters for its pro-rata entitlement.

Analysts have touted Chartered as a takeover target because of its appetising valuation. Its price-to-book value is just 0.43 times.

Chartered has said recent signs point to the industry having bottomed. The company reported a first-quarter net loss of US$98.8 million, reversing a US$2.4 million profit a year earlier. Revenue sank 37.2 per cent to US$243.9 million, from US$388.2 million a year earlier.