Note 3. Divestment
On March 13, 2013, the Company announced that it divested a controlling stake in its subsidiary ASM Pacific Technology Ltd ('ASMPT'). The sale of the shares officially closed on March 15, 2013. The Company sold 47,424,500 ordinary shares of ASMPT at a price of HK$90 per share to institutional or other professional investors through a partial secondary share placement, representing an 11.88% stake in ASMPT. The placement generated cash proceeds for the Company of HK$4,192 million (approximately €413 million).
|Paid fees, stamp duty and other expenses||(7,213)|
|Cash balance ASMPT upon sale||(116,174)|
|Net cash on disposal ASMPT||298,254|
The sale of the 11.88% stake caused ASMI to cease control of ASMPT. According to IFRS the accounting of this sale consists of two separate transactions:
- A sale of a 51.96% subsidiary; and
- A purchase of a 40.08% associate.
These transactions resulted in a substantial gain and the deconsolidation of ASMPT. This gain consisted of two elements, the realized gain on the sale of the 11.88% stake amounting to €252 million and an unrealized re-measurement gain on the remaining 40.08% of the retained interest in ASMPT approximating €1,156 million. The purchase of the associate resulted in the recognition of the associate at fair value.
After the initial accounting of the sale transaction and related gains, subsequent accounting under IAS 28R, Investments in associates and joint ventures, requires that future income from ASMPT will need to be adjusted for the fair value adjustments arising the basis differences as if a business combination had occurred under IFRS 3R, Business combinations, i.e. a purchase price allocation ('PPA').
The purchase of the associate has been recognized at fair value, being the value of the ASMPT shares on the day of closing of the purchase transaction. IFRS requires that the composition of such a fair value needs to be determined through a PPA. This process took place in the remaining period of 2013. The PPA resulted in the recognition of intangible assets for customer relationship, technology, trade name and product names. For inventories and property, plant & equipment a fair value adjustment was recognized.
Prior to accounting for the ASMPT investment under the equity method it was concluded that the Company lost control of ASMPT upon the sale of the 11.88% stake in ASMPT. The Company has concluded that its 40.08% retained interested in ASMPT does not constitute control under IFRS.
Under IFRS, the disposal of the ASMPT business classifies as discontinued operations. Therefore, the gain on disposal is included in the profit or loss on discontinued operations. The discontinued operations presentation also requires the comparative periods in all 2013 financial statements to be adjusted.
Reporting ASMI share in net earnings of ASMPT in the consolidated statement of operations of 2013:
|Year ended December 31, 2013|
|Result investments and associates|
|ASMI share net earnings March 16 - December 31, 2013||24,093|
|Amortization other intangible assets and fair value changes from PPA||(56,654)|
|Reported on line result investments and associates||(368,331)|
|ASMI share net earnings January 1 - March 15, 2013||(5,398)|
|Realized gain on sale 11.88% ASMPT shares||252,370|
|Unrealized remeasurement gain on retained 40.08% ASMPT shares||1,155,624|
|Reported on line result discontinued operations||1,402,596|