US investment firm KKR & Co has promised not to list LCY Chemical Corp (李長榮化工) in China or Hong Kong as a precondition for approval of its acquisition of the Taiwan-based chemical company.
The Investment Commission on Tuesday issued the green light for the acquisition after KKR made the pledge, commission spokesperson Yang Shu-ling (楊淑玲) said.
LCY Chemical said that its stock would be delisted at the end of next month.
The company has previously said that it plans to list again within five years after delisting.
The sale was first announced in July, when LCY Chemical said KKR would buy all its outstanding shares for NT$47.8 billion (US$1.55 billion), or NT$56 per share, through KKR’s Luxembourg-based unit LuxCo.
The acquisition would include a cash dividend of NT$2.9 to LCY Chemical shareholders, which would bring the actual price of the deal to NT$53.1 per share, the company said.
The stock yesterday closed 2.73 percent higher at NT$52.70 on the Taiwan Stock Exchange.
Under the deal’s terms, KKR is to become the company’s sole shareholder, but would later enter into a joint venture with the family of LCY Chemical’s former chairman, Bowei Lee (李謀偉).
Lee resigned as company chairman after it was implicated in a series of gas explosions in Kaohsiung in 2014 that resulted in 32 deaths.
The Lee family, currently the biggest shareholder with a 27.8 percent stake, would take a 45 percent share in the joint venture, while KKR would hold 55 percent.
In addition to the promise not to list LCY Chemical in China, Yang said KKR has also pledged to provide the company’s employees with benefits and working conditions that are at least equal to what the company is providing now.
Yang said the commission would follow the case closely to ensure that KKR keeps its promise to treat the employees well.
The Fair Trade Commission approved the acquisition last month, saying it did not see any market competition issues arising from the deal.
LCY Chemical posted a loss per share of NT$9.76 in 2014, because of the effect the explosions had on business.
However, its earnings per share (EPS) recovered to NT$11.69, NT$4.65 and NT$4.20 in 2015, 2016 and last year respectively.
It posted EPS of NT$2.83 in the first nine months of this year, compared with NT$3.32 over the same period last year.
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