Philips sells NT$57.7 bil. of TSMC stake

The China Post staff and Bloomberg

Royal Philips Electronics NV yesterday sold about NT$57.7 billion of Taiwan Semiconductor Manufacturing Co. (TSMC) as part of its plan to sell its entire stake in the chipmaker. Philips sold about 887 million Taiwan Semiconductor shares for NT$65 each after the market closed in Taiwan, cutting its stake to 12.8 percent from 16.2 percent, according to an e-mail from Philips and a statement issued by the Taiwan Stock Exchange.

Philips plans to sell its US$8.4 billion stake in TSMC, the world’s biggest supplier of made-to-order chips, by 2010 in order to focus on units making medical equipment, lamps and small appliances. Taiwan Semiconductor shares gained 1.1 percent to NT$67.20 in Taipei yesterday. Philips expects a non-taxable first-quarter gain of 725 million euros from yesterday’s sale, it said in the e-mail. The purchasers intend to hold the shares as “long-term” investments, Taiwan Semiconductor spokesman J. H. Tzeng said yesterday in a phone interview, declining to identify the buyers.

Cathay Financial Holding Co., Fubon Financial Holding Co. and Shin Kong Financial Holding Co. said they are interested in buying Taiwan Semiconductor shares from Philips, the Commercial Times said yesterday. Philips’ disposal meant that overseas investors sold a record NT$54.9 billion net of Taiwan shares yesterday, according to data from the Taiwan Stock Exchange. Excluding the stake sale, overseas investors bought about NT$2.8 billion worth of shares. Industry analysts have expressed their approval for the move, saying it would contribute to an increase in TSMC’s return of equity due to a reduction of capital. TSMC currently has capital of NT$258.2 billion. With its planned buy-back of some of the shares formerly held Philips, the company may see capital reduced by NT$8.675 billion by the end of the year. By 2010 the company is expected to reduce capital by NT$22.3 billion to NT$235.6 billion. It is expected that after the transaction is complete, TSMC will see its earnings per share increase by 3 percent while return of equity 1.5 to 2 percent, analysts said.