Taiwan Optical Platform Co (台灣數位光訊) yesterday said it plans to acquire a 65 percent stake in Eastern Broadcasting Co (EBC, 東森電視) for NT$11.12 billion (US$351.1 million) in a bid to expand its presence in the nation’s broadcasting market.
The announcement came less than two weeks after DMG Entertainment dropped its NT$18.9 billion bid to acquire EBC due to drawn-out reviews by local regulators.
“We are a local cable TV system operator. We have been interested in acquiring EBC since Carlyle Group expressed its intention to unload its stakes,” Taiwan Optical Platform chairman Rocky Chien (簡森垣) told a news conference.
Taiwan Optical Platform provides as Internet broadband access service, online gaming, e-learning, VoIP service and wireless broadband service. The deal will help the company enhance its digital contents and improve its position in the cable TV market, the Taichung-based Taiwan Optical Platform said.
EBC operates 10 TV channels, including two news channels, in Taiwan and elsewhere.
Taiwan Optical Platform is the nation’s fifth-largest cable TV system operator, with 295,600 subscribers, or about 5.8 percent of the total 5.11 million.
The company said it has signed a share purchase agreement with Carlyle Group to buy its 61 percent stake in EBC.
The agreement is due to expire in March next year and can be extended by three months.
Taiwan Optical Platform said it also plans to buy another 4 percent stake from EBC employees.
The company said it plans to issue new shares and seek loans from banks to fund the deal.
DMG’s decision to drop its EBC bid gave Taiwan Optical Platform leeway to acquire the cable TV firm. DMG has been under scrutiny by the National Communications Commission (NCC) and the Investment Commission due to concerns that Chinese investors could be involved in the transaction. The regulators have been reviewing the case since it was submitted in December last year.
The deal between Taiwan Optical Platform and Carlyle Group came as a surprise for Eastern Media International Corp (東森國際) and is expected to undermine Eastern Media’s plan to regain control over EBC.
Eastern Media, which sold its 61 percent stake in EBC to the Washington-based Carlyle in 2006, yesterday said it has been raising capital to buy back EBC shares after the DMG deal fell through.
Eastern Media holds a 21.5 percent stake in EBC.
The company said that it is considering taking legal action over the deal, as it has priority to make a bid for EBC stakes based on an agreement signed with Carlyle Group in 2006.
Taiwan Optical Platform’s offer needs to be approved by the NCC, the Investment Commission and the Fair Trade Commission before it can be finalized.
Commenting on concerns over potential competition, Chien said it should not be a serious concern, given Taiwan Optical Platform’s small market share.
The company looks to shrink the gap with the nation’s fourth-biggest cable provider, Taiwan Fixed Network (台灣固網), as the number of its subscribers would jump to about 500,000 if its acquisition bid obtains regulatory approval. Its market share would rise to about 10 percent.
The Investment Commission said it has not received any applications from Taiwan Optical Platform or Carlyle, but it is possible that it will approve Taiwan Optical Platform’s planned investment in EBC.
“The case is less complicated than DMG Entertainment executive officer Dan Mintz’s planned acquisition of EBC, as the buyer is not a foreign investor,” commission executive secretary Emile Chang (張銘斌) said by telephone.
Chang said the commission needs to examine whether Carlyle has violated any regulations in Taiwan.
The commission is likely to allow the bid if the NCC approves it, Chang said.
Additional reporting by Lauly Li
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