ASMI Soars After Founder Drops Opposition To Company's Split

ASM International NV's (ASM.AE) shares surged to a six-week high Wednesday after founder and major shareholder Arthur Del Prado dropped his opposition to splitting up the chip-equipment manufacturer.

Del Prado, who owns 22% of ASMI, on Tuesday said on the sidelines of the company's annual general meeting that both the front-end and back-end divisions must be able to stand on their own feet, a spokesman confirmed, after newspapers reported the comment.

The front-end division produces machines for the first phase of chip manufacturing, while the back-end division makes equipment for the assembly and packaging of semiconductors. Back-end production is carried out by 52%-owned Hong Kong-listed ASM Pacific Technology Ltd. (0522.HK), which is worth more than ASMI itself, leading to calls from certain shareholders to break up the company.

Del Prado also said he supports an investigation requested by shareholders to look into ASMI's undervaluation.

At 1423 GMT, ASMI's shares were 7.8% higher at EUR30.18.

Analysts said Del Prado's comment represents a surprising turnaround, because he had been fiercely opposed to a break-up, pointing to synergies from keeping both divisions in one company.

Several years ago, Del Prado fought a bitter battle with private-equity shareholders, who wanted to split ASMI and release the hidden value represented by ASM Pacific Technology's higher valuation.

Rabobank analyst Philip Scholte said Del Prado's latest comments raise the chances of a change to ASMI's company structure. He has raised his rating on the stock to buy from hold, and his target price to EUR35 from EUR28.

ING analyst Niels de Zwart said he expects a vast majority of ASMI's shareholders to support a split as the most likely future scenario for the company. He has a buy rating on the stock and a EUR38 target, and ASMI has been put back on ING's list of favorite Benelux stocks.

-By Ben Zwirs and Robert van den Oever, Dow Jones Newswires; [phone]; [e-mail]