Published May 30, 2009

Temasek in talks on Chartered stake sale

No definitive offer has been put on the table so far by Abu Dhabi's ATIC, says source

By JAMIE LEE

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TALKS have started between Temasek Holdings and Advanced Technology Investment Company (ATIC) on the sale of the Singapore investment company's near-60 per cent stake in Chartered Semiconductor Manufacturing to the Abu Dhabi firm. But no definitive offer has been put on the table so far, a source familiar with the situation told BT yesterday.

A separate source told BT on Thursday that ATIC had bid to buy Chartered in a deal that values the company around $2.45 billion.

Chartered yesterday halted trading of its shares to issue a statement in which it said it has not received 'such a bid' from ATIC.

'From time to time, Chartered engages various parties in discussions to pursue business opportunities or concerning the strategic direction of the company, with a view to maximising value for all shareholders,' the chipmaker said. 'There is no assurance that any definitive or binding agreement will result from these discussions.'

But market watchers noted that any offer will directly involve Temasek, the controlling shareholder, rather than Chartered itself, since it is the target.

Temasek declined to comment on the speculation, saying it was 'inappropriate'.

Chartered shares continued to rise after the trading halt was lifted at 11.15am. The stock rose as much as 4.13 per cent before ending at $2.20, up 0.92 per cent, with 12.5 million shares changing hands. Over the past three trading days, Chartered shares have risen 8.37 per cent on speculation of a takeover, against a one per cent gain by the benchmark Straits Times Index.

Loss-making Chartered has long been seen as a takeover target, with Taiwanese firms Taiwan Semiconductor Manufacturing Company and United Microelectronics Corp previously regarded as potential suitors. Bank of America-Merrill Lynch analyst Daniel Heyler told Reuters that ATIC is 'building ownership' in the global foundry industry.

ATIC's dialogue with Temasek and Chartered is aligned with its efforts to build an 'IBM alliance' since IBM is a key client of Chartered and Advanced Micro Devices (AMD), he said.

ATIC agreed in March to pay US$2.1 billion for 55.6 per cent of a joint venture with AMD, according to the Reuters report.