Advanced Semiconductor Engineering (ASE) and Siliconware Precision Industries (SPIL) have reached an agreement to establish a holding company, which will own both ASE and SPIL.

The new holding company will be listed on the Taiwan Stock Exchange (TSE), and trade its American depositary shares (ADS) on the New York Stock Exchange, according to a joint statement issued by both companies.

The new holding company will simultaneously hold 100% equity interests in both ASE and SPIL, which will become "parallel sibling companies" under the firm.

Under the terms of the agreement, each ASE share will be swapped for 0.5 shares of the holding company, while the holding company will pay NT$55 (US$1.69) in cash per SPIL share.

ASE's 33.29% stake in SPIL will also be acquired by the new holding company for NT$55 in cash per share.

After the formation of the new holding company, ASE and SPIL will continue to run their operations independently and keep their own management team and employees, the companies said.

ASE and SPIL are scheduled to hold their respective board meeting by June 25 and gain approval for signing an agreement on the planned share purchases for the formation of the holding company.

Market sources expect ASE and SPIL to obtain approval from their respective provisional shareholders meeting as early as September for the planned formation of the new holding company.