MStar, MediaTek shares edge down amid renewed merger uncertainty


TAIPEI — Shares of MStar Semiconductor Inc. and MediaTek Inc. came under pressure yesterday amid renewed concerns over a planned merger of the two integrated circuit designers, dealers said.

Uncertainty over the merger mounted after MediaTek withdrew an application it had filed with the Financial Supervisory Commission (FSC), Taiwan’s financial regulator, to issue new shares for the merger with MStar, they said.

At the end of trading, shares of MStar lost 3.1 percent to NT$203.5, while shares of MediaTek had shed 0.64 percent to NT$309.5. “It seems that the withdrawal of the new share application has raised concerns over the merger,” MasterLink Securities analyst Tom Tang said. “The selling indicated many investors are afraid that the merger plan will fall apart.”

The FSC said Tuesday that it had agreed to MediaTek’s request to drop a plan it filed at the end of last year to issue about 221 million new shares for the purpose of acquiring MStar.

In a statement released Wednesday morning, MediaTek said it withdrew the new share application because it was postponing the target date for completing the merger to May 1 from the previous target of Jan. 1.

MediaTek has previously attributed the delay to inability to secure approval for the deal from foreign countries, including China and South Korea, which have cited anti-trust concerns. MediaTek said it will continue to communicate with fair trade authorities overseas in a bid to get the green light for the merger. The IC designer said that after securing approval from foreign fair trade regulators, it will re-submit an application to the FSC to raise its capitalization in preparation for the deal.

In August 2012, MediaTek concluded a tender offer to acquire a 48 percent stake in MStar before kicking off the next stage of efforts to bring its smaller rival into the fold.

“The merger deal seems to be murky at the moment, although MediaTek has emphasized its ambition to complete it,” Tang said.

“So any negative leads, like the withdrawal of the new share issuance, will prompt investors to cut their holdings in the two IC designers,” Tang said.

“Ahead of securing approval from foreign regulators, I expect such uncertainty will continue to affect the two stocks.”

In addition to uncertainties over the merger, MediaTek is also facing concerns over the impact of the industry’s traditionally slow first quarter on its bottom line.

“Even if MediaTek shares stage a rebound, the stock may face stiff technical resistance at around NT$320.00,” Tang said.