Philips plans TSMC divestment
Royal Philips Electronics and Taiwan Semiconductor Manufacturing Company Ltd have jointly announced that the companies have agreed to a multi-phased plan to facilitate an orderly exit by Philips from its current shareholding in TSMC.
Philips intends to sell in the near future up to USD 1.75 billion worth of TSMC shares to accommodate identified demand from long-term financial investors in Taiwan. To this end an application has been filed with the Taiwan Stock Exchange by Philips. Philips intends to offer up to USD 2.5 billion worth of TSMC shares, in the form of American Depositary Shares, through a public offering in the United States without over-allotment option. The ADSs sold in this offering are expected to be listed on the New York Stock Exchange. This offering would follow a TSMC board resolution to approve the conversion of TSMC common shares into American Depository Shares on behalf of Philips. Each ADS represents five TSMC common shares.
This transaction is subject to all regulatory approvals, including registration with the U.S. Securities and Exchange Commission, and is subject to market conditions. Completion is expected in 2007. It is the current intention of TSMC and Philips that no further ADS offerings will be conducted in respect of Philips' shareholding in TSMC.
TSMC plans to conduct a share repurchase via tender offer in 2007 on the Taiwan Stock Exchange to buy back up to approximately USD 1.5 billion worth of shares in TSMC, and cancel the repurchased shares, subject to TSMC board approval. Philips intends to participate in the share repurchase, and Philips' representative on the TSMC Board of Directors has resigned as a director.
Philips will no longer maintain any board position at TSMC.
TSMC intends to conduct additional share repurchase programs between 2008 and 2010, subject to maintaining its current annual cash dividend per share and cancel the repurchased shares. Philips intends to participate in these share repurchase programs with its remaining TSMC shares. Philips will also consider other sales to long-term financial investors mutually agreeable to Philips and TSMC.
Philips currently owns 16.2% of TSMC share capital, with a current market valuation of approximately USD 8.5 billion.
"We are pleased to have reached agreement with TSMC on this plan to facilitate our exit from our current shareholding in TSMC in an orderly, responsible manner," Philips Chief Financial Officer Pierre-Jean Sivignon said. "For Philips, selling our stake in TSMC is a logical consequence of our decision to exit the semiconductor business, to which end we made a first, significant step in 2006 when we sold a majority stake in our semiconductor division."
Ms. Lora Ho, TSMC Vice President and Chief Financial Officer said: "we are pleased to have come to a satisfactory solution to facilitate the exit of Philips' holding of TSMC shares. We intend to make good use of our cash while reiterating our commitment to maintain our current annual cash dividend per share."
