SPIL Issues Letter To Shareholders For 2018 EGM

Since the announcement of the proposed Joint Share Exchange on June 30, 2016 between Siliconware Precision Industries Co., Ltd. ("we", "SPIL" or the "Company") and Advanced Semiconductor Engineering, Inc. ("ASE"), we have achieved substantial progress in obtaining clearance from the relevant governmental authorities, including clearance from the Taiwan Fair Trade Commission ("Taiwan FTC") on November 16, 2016 and the U.S. Federal Trade Commission ("US FTC") on May 15, 2017, and conditional approval from the Anti-Monopoly Bureau of the Ministry of Commerce of the People's Republic of China ("MOFCOM") on November 24, 2017.

To achieve our ultimate goal of strengthening the strategic position, we would like to seek your support for the Joint Share Exchange, i.e., to establish the proposed ASE Industrial Holding Co., Ltd. ("Holdco"), and to make both ASE and SPIL wholly-owned subsidiaries of Holdco. In that regard, we would like to seek your approval for the following items in the upcoming shareholders' meeting scheduled on February 12, 2018:

• Joint Share Exchange;
• Joint Share Exchange Agreement; and
• Supplemental Agreement.

Proposal details

1. Joint Share Exchange & Joint Share Exchange Agreement

SPIL and ASE plan to implement the Joint Share Exchange, whereby ASE will file an application to establish Holdco, of which ASE and SPIL will become wholly-owned subsidiaries. HoldCo will acquire all issued and outstanding shares of both SPIL and ASE, both of which will be delisted from the Taiwan Stock Exchange and become wholly-owned subsidiaries of HoldCo concurrently, and subsequently file to revoke their respective public-filing status in Taiwan. The Joint Share Exchange will be conducted according to the below:

• At an exchange ratio of one ASE common share for 0.5 HoldCo common share
• Each SPIL common share will receive NT$51.20 (The initial cash consideration was NT$55. The cash consideration has been adjusted to NT$51.2 after deducting the NT$2.8 per share cash dividend distribution as well as a NT$1.0 per share payment from capital reserve in 2016.)

After the establishment of HoldCo, SPIL and ASE will each maintain its separate legal entity status, retain its legal entity name, and maintain its current independent operations and operating model. SPIL and ASE will also each retain its full management team and employees, and its current organizational structure, compensation, relevant benefits and personnel regulations will continue to remain unchanged.

Please refer to the announcement for the Joint Share Exchange Agreement announced on June 30, 2016 attached here.

2. Supplemental Agreement

On November 24, 2017, MOFCOM announced that it has conditionally approved the Joint Share Exchange (a copy of the complete announcement is attached here for your easy reference).  MOFCOM requires that ASE and SPIL perform the obligations set for below, and that ASE, SPIL and HoldCo submit a report to MOFCOM every six months for the execution of such obligations:  

• ASE and SPIL shall maintain as independent competitors and carry out independent operations within the 24-month restricted period (the "Restriction Period");
• HoldCo shall exercise limited shareholders' rights within the Restricted Period: (1) Holdco to receive dividends and financial information from both parties, (2) the research and development related plans of both parties to be coordinated through a committee established by HoldCo, (3) matters related to businesses conducted by both parties in addition to the Packaging & Testing services to be coordinated through a committee established by HoldCo, and (4) HoldCo and ASE or SPIL to provide funding loans or financing guarantee for each other according to the request or demand of the other.
• ASE and SPIL shall undertake to provide services for customers in a non-discriminatory way within the Restricted Period, and reasonably determine the service price and other transaction conditions.
• ASE and SPIL shall undertake not to restrict the selection of customers for other suppliers within the Restricted Period, and cooperate with the customers in changing suppliers according to their requirements.

To accommodate the time required for closing, SPIL and ASE plan to sign the Supplemental Agreement to extend the last day of the Joint Share Exchange from December 31, 2017 to October 31, 2018. Please refer to the announcement on December 14, 2017 attached here.

For the above proposals, our Audit Committee consisting entirely of independent directors and acting in lieu of Special Committee of the Company, has obtained opinions with regard to the fairness of the terms of the Joint Share Exchange Agreement from independent financial advisors prior to the announcement on June 30, 2016, and reviewed an updated opinion dated January 15, 2018 after significant progress has been made from regulatory agencies. Having carefully considered all relevant factors and conclusions, including the unanimous affirmation of the Special Committee and the fairness opinion letters from the independent financial advisors, the Board deems that the offer price and other terms and conditions of the Joint Share Exchange Agreement are reasonable, fair and in the best interest of our unaffiliated shareholders.

With your approval, SPIL and ASE will move ahead to establish HoldCo. Its establishment is targeted to be completed by the end of April 2018, subject to the review progress of the competent authorities. The following is a tentative timetable of the various trading-related events in connection with the completion of the Share Exchange:

We believe the proposed Joint Share Exchange will greatly strengthen our strategic position and create new opportunities in the semiconductor industry. This is in line with our consistent goal of maximizing shareholders' value and echoes the global industry trend. We look forward to your support in the upcoming EGM.

For more information, you can find our communication slides or please contact our VP of Finance Department Eva Chen at [email protected] or +886-4-25341525 #1536 or our Spokesperson Byron Chiang at [email protected] or +886-3-5795678 #3676.

Yours Sincerely,

Chairman Bough Lin

SOURCE Siliconware Precision Industries Co., Ltd.