2009-12-15
Dear Shareholders,
We announced our Spin-off Plan (the “Spin-off”) last Friday. During the past few days, we received many comments from the shareholders with regard to the questions of the Spin-off. We would like to take this opportunity to further communicate with you on the Spin-off.
First of all, we are by no means to do the Spin-off at cost of shareholders' interests. On contrary, we have considered many alternatives and done our best to take care of the best interests of the shareholders. Some of you may challenge why we elect to announce to do the Spin-off at the present point of time. This is because that both ASUS and Pegatron come to a critical point now. ASUS could not maintain its competitiveness in the NB industry as many other EMS service providers won't treat ASUS as important strategic customer given the fact that ASUS has Pegatron. On the other hand, Pegatron is trapped in the current business scope as many OEM/ODM customers won't place more orders with Pegatron in consideration of ASUS 100% ownership in Pegatron. This tie between ASUS and Pegatron really hinders ASUS' and Pegatron's business developments. Time is not with us. We need to make a quick and smart move. If we chose not to do the Spin-off, the shareholders probably would suffer the most as both ASUS and Pegatron would be dried up sooner or later. The sooner we break the tie the lesser the shareholder will suffer. The contemplated Spin-off is considered the fastest and most effective solution to reduce and even remove this concern.
Moreover, if you further look into the current status, you should understand that the shareholders have actually owned Pegatron shares involuntarily, which means ASUS share prices could have been discounted by its ownership of Pegatron whose financials are not publically accessible by the shareholders. From our perspective, we believe there is hidden value from Pegatron; however, because the shareholders can not access Pegatron's financials, the value of Pegatron and in turn the value of ASUS have been underestimated or over-discounted for a long time. After the Spin-off, Pegatron's financials will be readily available for the public after the IPO and hence the hidden value would be unlocked. Upon completion of the Spin-off and Pegatron IPO, in fact the shareholders will have more options for their investment decisions in ASUS, i.e. they can keep ASUS or Pegatron only or they can keep both of them. Therefore, the executive officers at ASUS and Pegatron consider the Spin-off necessary and proper and it is their fiduciary duty to carry out such Spin-off plan to maximize the shareholder's best interests.