Sat, Oct 20, 2012 - Page 13 News List

Finance watchdog could scupper Next deal: reports

CONCERNS:The FSC said the deal may challenge its call for the separation of financial and non-financial businesses to avoid volatility upsetting the nation’s financial stability

Staff writer

Next Media Group’s (壹傳媒集團) plan to sell its media outlets in Taiwan has raised concerns at the financial watchdog over concentration of power and the potential for blurred lines between financial and non-financial sectors given the close ties between buyer Jeffrey Koo Jr (辜仲諒) and Chinatrust Financial Holding Co (中信金控), local media said yesterday.

The Hong Kong-based group said in a filing to the Hong Kong Stock Exchange on Wednesday it had inked a memorandum of understanding to sell the Chinese-language Apple Daily, Taiwan Sharp Daily, Next Magazine and Next TV for NT$17.5 billion (US$600 million) “to Koo.”

The filing did not spell out Koo’s full name, but Jeffrey Koo Jr, chairman of the Chinatrust Charity Foundation, is reportedly the prospective buyer, together with Formosa Plastics Group (台塑集團) chairman William Wong (王文淵) and a Singapore-based private equity fund.

When questioned by reporters during a lunch meeting on Wednesday with President Ma Ying-jeou (馬英九) and other business leaders at the company’s Taipei headquarters, Koo, the eldest son of Chinatrust Financial founder and chairman Jeffrey Koo (辜濂松), did not deny or confirm the deal.

On Thursday, the Financial Supervisory Commission (FSC) voiced reservations about the deal on the grounds that it may challenge its call for the separation of financial and non-financial businesses to avoid cyclical volatility in either sector from upsetting the nation’s financial stability.

Jean Chiu (邱淑貞), a deputy director-general of the commission’s banking bureau, reportedly said that the watchdog would look into the buyers’ sources of funding and make known its opinions to help the Ministry of Economic Affairs review the deal, two Chinese-language newspapers, the Commercial Times and the Economic Daily News, reported yesterday.

In previous cases, the commission’s intervention sank a planned acquisition of Advanced Semiconductor Engineering Inc (日月光半導體) by The Carlyle Group and another merger deal involving Yageo Corp (國巨) and Kohlberg Kravis Roberts & Co LP.

Based on newspaper reports, the commission disapproves of major shareholders of financial institutions having a controlling interest in non-financial firms and it can intervene by asking financial firms to remove those individuals from their boards.

Major shareholders are individuals who own more than a 10 percent stake in a firm.

Jeffrey Koo Jr does not hold any position at Chinatrust Financial or control a stake in excess of 10 percent, but Chiu reportedly said Koo’s family should also be factored in when considering the threshold.

The commission would check if Jeffrey Koo Jr secures loans from Chinatrust Financial to fund the buyout, local media cited Chiu as saying.

The restrictions are intended to prevent companies from having too much influence, the newspapers cited Chiu as saying.

The commission would attempt “moral persuasion,” before taking other steps, the reports said.

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