KKR & Co has been given approval to acquire LCY Chemical Corp (李長榮化工), the Fair Trade Commission (FTC) announced on Friday, saying it did not expect competition issues to arise from the deal.
KKR is a multinational investment firm that has a big portfolio, particularly in financial assets, while LCY Chemical produces mainly rubber items, solvents and high-performance plastics, the commission said in a statement.
The deal would allow KKR to diversify its portfolio and is not expected pose any threats to competition in the chemical product market, the commission said, adding that the economic benefits would outweigh any negative factors.
LCY Chemical in July announced that KKR would buy all outstanding LCY shares for NT$47.8 billion (US$1.55 billion), or NT$56 per share, through its Luxembourg-based unit LuxCo.
The acquisition includes a cash dividend of NT$2.9 for LCY Chemical shareholders, which would bring the full price of the deal to NT$53.1 per share, LCY Chemical said.
With the acquisition, KKR would become the only shareholder in the Taiwanese firm, but is to enter a joint venture with the family of former LCY Chemical chairman Bowei Lee (李謀偉).
The Lee family, which is now the biggest LCY Chemical shareholder, with a 27.8 percent stake, will take a 45 percent share in the joint venture, while KKR will hold 55 percent, the commission said.
Lee resigned as chairman of LCY Chemical following a series of gas explosions in Kaohsiung in 2014 that killed 32 people.
Since then, LCY Chemical has recovered and become profitable again because of its solid fundamentals, reporting earnings per share (EPS) of NT$1.79 in the first half of the year.
The company posted EPS of NT$4.2 last year and NT$4.65 in 2016.
In September, LCY Chemical said it would delist from the Taiwan Stock Exchange after its acquisition by KKR, but would seek to list again in five years’ time.
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