Fri, Jul 20, 2007 - Page 12 News List

Oaktree allowed to buy Fu Sheng


The Investment Commission gave the go-ahead yesterday for private equity fund Oaktree Capital Management LLC's acquisition of Fu Sheng Industrial Co (復盛公司), the largest-ever buyout of a listed company in Taiwan.

Oaktree made the bid to acquire 100 percent of Fu Sheng's shares through Valiant International Co (勇德國際), which is jointly owned by funds managed by Oaktree Capital Management and the family of Fu Sheng chairman Lee Hou-teng (李後藤).

Fu Sheng is the world's largest maker of golf club heads.

Oaktree would acquire Fu Sheng for NT$28.3 billion (US$852 million). Including the transfer of net debt, Fu Sheng's price was approximately NT$33 billion, Valiant International said in a statement.

The tender offer was expected to be completed on next Wednesday. After the tender offer, Valiant International plans to merge with Fu Sheng in a second-step cash merger and delist Fu Sheng from the Taiwan Stock Exchange, the statement said.

As of yesterday, Valiant International had acquired more than 80 percent of Fu Sheng's outstanding shares, Fu Sheng spokesman Hsiao Chia-shih (蕭家適) said by telephone.

"The buyout is merely a shift in ownership and will not affect company operation, including personnel and management," Hsiao said.

He said the company had not yet chosen a date for delisting Fu Sheng, as it will be subject to the approval of regulatory agencies following completion of other corporate procedures.

Lee yesterday welcomed the commission's decision.

"We believe that Oaktree will prove a good partner in our efforts to transform Fu Sheng into a global company firmly rooted in Taiwan," he said in the statement.

The decision came before the stock market closed. Shares of Fu Sheng rose 0.27 percent to close at NT$37.25 on the Taiwan Stock Exchange yesterday.

"The approval of the buyout shows that the government does not block overseas private equity funds from investing in Taiwan as long as the investment will not adversely impact on local industries," a commission official said on condition of anonymity.

On May 9 Valiant International launched the tender offer on behalf of California-based Oaktree and agreed to acquire 100 percent of the Taiwanese company at NT$37.50 per share, which was a 10.29 percent premium on Fu Sheng's share price of NT$34 at the time, or a 20 percent premium on its 60-day average closing price before the buyout plans were announced.

Lee, who owned 46.8 percent of Fu Sheng, backed the deal. But progress was delayed by strict government scrutiny as the Financial Supervisory Commission demanded more details on the acquisition.

Fu Sheng has a joint-venture with chipmaker Mosel Vitelic Inc (茂矽電子) in China to produce conducting wires for semiconductors, and reports said the government worried Fu Sheng might shift investment to China.

Oaktree's acquisition of Fu Sheng saw additional set backs earlier this month, when prosecutors summoned for questioning eight company officials, including Lee, in a probe of suspected insider trading related to the buyout.In November last year, the government expressed similar concerns when a consortium led by Carlyle Group launched a buyout bid for Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world's largest chip testing and packaging company. Carlyle withdrew the offer in April, after Kaohsiung-based ASE said it was dissatisfied with the price offered.

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