US private equity fund Kohlberg Kravis Roberts & Co (KKR) and Yageo Corp (國巨) founder Pierre Chen (陳泰銘) yesterday offered to buy a majority stake in the nation’s top passive component maker, in a deal valued at NT$46.78 billion (US$1.6 billion), with the aim of helping Yageo Corp better manage future challenges.
KKR and Chen offered to buy Yageo shares at NT$16.10 per share in cash, representing a premium of about 14.2 percent compared with the stock’s closing price of NT$14.10 on Friday last week. The buyout will be conducted via a joint venture between KKR and Chen called Orion Investment Co Ltd (遨睿).
Orion is expected to hold a more than 50 percent stake in Yageo after completing the tender offer, bringing about the merger of Yageo and Orion, according to a statement released by KKR and Chen. Yageo will be delisted from the local stock market following the merger.
In the family
Funds managed by KKR and Chen’s family currently own a combined 34.3 percent share of Yageo’s fully diluted outstanding shares following conversion of KKR convertible bonds and the exercise of all vested employee stock options.
“From a long-term perspective, the new shareholding structure will enable investments in accelerated high-end product development and deeper penetration into Western markets, which will complete our transformation into a global leader across our focus products,” Chen said in the statement.
Chen doubles as Yageo’s chairman and CEO.
Shares of Yageo rallied by 6.74 percent to NT$15.05 yesterday.
The public tender offering was released prior to the opening of the local stock market.
In a letter posted on the company’s Web site, Chen told company employees that Yageo’s “current business model, operations, services and organization will not be affected by the transaction and all operations will remain normal.”
Major growth
Last year, Yageo’s net income grew more than five-fold to NT$4.15 billion, from NT$673 million in 2009. Revenues expanded 42.8 percent year-on-year to NT$27.32 billion last year, from NT$19.13 billion.
“We are very excited to make this investment in Taiwan and look forward to contributing to the growth of the economy and to being a long-term, constructive partner,” KKR partner Julian Wolhardt said in the statement.
The new shareholding structure is expected to provide the company with more flexibility in facing the global challenges ahead, the statement said. Yageo would remain a Taiwan-based company under the majority control and leadership of Chen, the statement said.
Chen and his family would hold about 55 percent of the new entity, which would still be called Yageo, he said in the letter.
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