| Summary: | 碩士 === 國立臺灣科技大學 === 財務金融研究所 === 101 === The purpose of this study is to set the introductory background on Spin-off restructuring
transactions, to present AsusTek as a company and to examine the impact of Spin-offs on Asus
during 2007 and 2010 Spin-off events. The Taiwanese company AsusTek decided to Spun-off
two of its subsidiaries with the intention of dividing the corporation in OEM, ODM and a brand
section. These subsidiaries became the independent companies of Unihan and Pegatron.
Subsequently on 2010 AsusTek resolved to again Spin-off further of their ODM holdings to
Pegatron International Investment. This case study is an illustrative introduction to AsusTek and
its Spin-off decision. The analytic chapter of this study focuses on the Spin-off value creating
effect of AsusTek for both 2007 and 2010.
To capture the value creating effects, the research methodology, based on existing
literature, centers on the abnormal returns of the stock market effect and operating performance
effect. In the case of the stock market effect I provide an analysis on the announcement effect
and long-term stock market effect of Asus’ the stock value, the benchmark being the returns of
the Taiwan Stock Exchange weighted index. For the operating performance effect I’ll run a
regression between pre-transaction financial ratios and post-transaction financial ratios, using as
benchmark the median and average operating performance over the periods analyzed to capture
abnormal returns and the performance of Asus compared to pre-transaction event windows.
The main conclusions of this study are the following. For the announcement effects
only the Spin-off of 2007 presented some abnormal returns. The 2010 Spin-off’s announcement
effect may be affected by external forces not captured by this analysis like the European Debt
crisis of 2009 which affected the exports of Taiwan in great measure. The long-term stock
market effect of the 2008 Spin-off seems not to have created value maybe due to the Global
Financial Crisis effect on the consumption of the Industry’s products. For the 2010 Spin-off
there seems to be abnormal returns present for the period spanning from second part of 2011
until the second part of 2012, there are also abnormal negative returns for the first 6 months
after the execution date of this 2010 Spin-off that may be caused by the European Debt crisis as
well. It is evident from this analysis also, that there is a difference between using adjusted
closing prices and regular closing prices due to a capital reduction on 2010 which affects the
long-term stock market effect of the 2010 Spin-off and the last year of the 2008 Spin-off, but the
results don’t change the general conclusion that there seems to be no long-term stock market
effect value creation for the 2008 Spin-off and only some value creation is present on the 2010
Spin-off. The Operating performance effect focuses on Profitability measures (Earning margin,
ROA and EBIT margin) as well as a Leverage measure (debt to asset ratios). For 2008 there are
no abnormal returns and underperformance for the Earning margin and ROA analyses and a
small abnormal return for EBIT margin with underperformance, the Leverage measure although
not abnormal is positively correlated to pre-transaction event windows. For 2010 there are no
abnormal returns for the Earnings margin and ROA analysis, underperformance for Earnings
margin and EBIT margin, the EBIT margin presents some abnormal returns and the ROA seems
to present a positive beta, the Leverage measure although not abnormal is also positively
correlated to pre-transaction event windows. In general Asus seems to present no or little value
creation effects.
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