UMC Board of Directors Important Announcement
Taipei, Taiwan, R.O.C.
- April 29, 2009 - United Microelectronics Corporation (NYSE:
UMC, TSE: 2303), ("UMC") convened its 19th session, 10th
term of its Board of Directors meeting today. During the meeting,
its board approved to propose the acquisition (the "Acquisition")
by UMC of the holding company of He Jian Technology (Suzhou) Co.,
Ltd. ("He Jian") for resolution at the annual shareholders
Established in late 2001
as a semiconductor foundry business, He Jian operates an 8-inch
fab in Suzhou, China with a monthly capacity of 41,000 wafers, He
Jian has made significant inroads into the China market and has
established strong relationships with local companies across the
semiconductor supply chain. He Jian was profitable from 2005 to
2007 and its operating performance and financial condition remain
UMC's core business has
been in semiconductor foundry for many years. In order to facilitate
UMC's global business reach beyond its current markets, to help
expedite business growth, to increase profitability, to enhance
shareholder value and to increase UMC's business competitiveness,
UMC believes that a production base in China is key.
During the past six months,
the global semiconductor market suffered in the significant financial
crisis that led to a worldwide economic downturn. The net value
and market value of many semiconductor companies were negatively
impacted. Conversely, China's market was relatively strong during
this period, attracting many customers that preferred the option
of local production. UMC viewed these circumstances as an opportunity
to invigorate itself towards long-term growth. After considering
the required manpower, capital and time required to build a new
fab, which would exceed one year, UMC proposed the Acquisition.
In addition to realizing the value of the 15% ownership interest
in the indirect holding company of He Jian held in trust for UMC
and promoting its shareholders' interest, UMC could acquire a fully
built, fully staffed and fully operational production base at an
attractive price. UMC further anticipates that, by focusing on customer
satisfaction, the strong foundation established by He Jian in China
will lead to further gains in market share. For He Jian, as an independently
operated semiconductor foundry company, the Acquisition is expected
to accelerate market penetration and increase profitability as a
result of being incorporated into UMC's world-class operations.
Under the terms of the
definitive agreement governing the Acquisition, holders of shares
of the holding company that indirectly own He Jian, but excluding
the 15% ownership interest held in trust for UMC, are entitled to
receive an aggregate consideration of approximately US$285 million.
These holders may elect to receive payment in the form of cash or
an equivalent value of UMC common stock or American Depositary Shares
("ADS"). The basis of the number of shares to be delivered
will be calculated by using the arithmetic average closing value
of UMC's common shares and ADSs during the 6-month period prior
to, but excluding, April 29, 2009, the date of the Board of Directors'
Consummation of the Acquisition
is subject to approvals from governmental authorities, the passage
of appropriate resolutions of the shareholders of UMC and the holding
company of He Jian and certain other customary conditions.
After the consummation
of the Acquisition, UMC plans to integrate resources, reduce operating
costs, and expand business scale, as well as to rapidly shorten
the time required for establishing a production base in China. With
China's current market still growing and the eventual overall semiconductor
industry recovery, UMC expects to expand the potential to grow its
long-term revenue and earnings. The expanded international presence
of UMC will also enhance its global competitiveness in the rapidly
developing semiconductor industry.
(Hong Kong) Limited, Taipei Branch, is the sole financial advisor
to UMC on the Acquisition.
UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry
that provides advanced technology and manufacturing services for
applications spanning every major sector of the IC industry. UMC's
customer-driven foundry solutions allow chip designers to leverage
the strength of the company's leading-edge processes, which include
production proven 65nm, 45/40nm, mixed signal/RFCMOS, and a wide
range of specialty technologies. Production is supported through
10 wafer manufacturing facilities that include two advanced 300mm
fabs; Fab 12A in Taiwan and Singapore-based Fab 12i are both in
volume production for a variety of customer products. The company
employs approximately 12,000 people worldwide and has offices in
Taiwan, Japan, Singapore, Europe, and the United States. UMC can
be found on the web at http://www.umc.com.