KKR & Co said it is taking over Taiwanese company LCY Chemical Corp (李長榮化工) in a deal valued at NT$47.8 billion (US$1.56 billion), as the global buyout firm seeks to make additional majority stakes purchases in Greater China.
A consortium led by New York-based KKR agreed to acquire all of LCY’s shares for NT$56 each, a 17.3 percent premium compared with Friday’s closing price, a press release said.
The transaction is expected to be completed in the fourth quarter of the year, subject to regulatory approvals. LCY would be delisted after the deal, it said.
The transaction is KKR’s second in Taiwan since it purchased US$230 million of convertible bonds in Yageo Corp (國巨) in 2007. KKR’s attempt to then take over the electronic-parts maker was rejected by regulators in 2011.
“Taiwan isn’t frequently the most focused-on market for private equity [PE], but we do see other firms assessing opportunities here,” KKR’s Greater China chief executive officer Paul Yang (楊文鈞) said in an interview. “We may be lucky to have one of the first privatizations across the finish line, but we do expect PE activity to pick up in the next two to three years.”
The LCY transaction is part of KKR’s drive to achieve a balance of control and minority deals in Greater China, Yang said.
Private equity would be increasingly attracted to “hidden champion” Taiwanese companies in lower-profile and specialized industries, such as the chemicals sector in which LCY is a leader, he said.
“This is significant for KKR because we’re returning to Taiwan,” Yang said. “China accounts for a significant portion of our Asian portfolio, but there’s greater scope to focus on Taiwanese opportunities. This transaction adds a different dimension to our Greater China portfolio.”
Yang sees opportunities to invest in mid-cap companies in Taiwan with US$2 billion to US$5 billion market capitalization, citing strong cash flows, reasonable valuations and a favorable financing environment in Taiwan.
Global investors have faced challenges disposing of their holdings in Taiwanese companies in the past few years. Carlyle Group finally got approval to sell its stake in Eastern Broadcasting Co (東森電視) in January after previous attempts were unsuccessful, while MBK Partners Ltd faltered in attempts to offload its holding in cable television operator China Network Systems Co (中嘉網路).
“In previous years, the PE community has been extremely focused on the process of getting exits and deals approved,” Yang said, adding that Taiwan has been overlooked because of challenges related to investing in and exiting certain regulated industries.
The KKR-led consortium, which includes LCY employees and LCY founding family members, plans to help the Taipei-based firm expand in international markets through mergers and acquisitions. LCY has production plants in Taiwan, China and the US, the release said.
“Many of these companies are family-controlled and are beginning to explore opportunities to expand their geographic coverage, broaden their portfolios and elevate their business to a higher level globally,” Yang said. “A lot of these companies are cash-rich, so the need for capital is secondary. They are realizing that a global partner can help them to become more visible in their industry.”
DEFENDING DEMOCRACY: Taiwan shares the same values as those that fought in WWII, and nations must unite to halt the expansion of a new authoritarian bloc, Lai said The government yesterday held a commemoration ceremony for Victory in Europe (V-E) Day, joining the rest of the world for the first time to mark the anniversary of the end of World War II in Europe. Taiwan honoring V-E Day signifies “our growing connections with the international community,” President William Lai (賴清德) said at a reception in Taipei on the 80th anniversary of V-E Day. One of the major lessons of World War II is that “authoritarianism and aggression lead only to slaughter, tragedy and greater inequality,” Lai said. Even more importantly, the war also taught people that “those who cherish peace cannot
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
‘FALLACY’: Xi’s assertions that Taiwan was given to the PRC after WWII confused right and wrong, and were contrary to the facts, the Ministry of Foreign Affairs said The Ministry of Foreign Affairs yesterday called Chinese President Xi Jinping’s (習近平) claim that China historically has sovereignty over Taiwan “deceptive” and “contrary to the facts.” In an article published on Wednesday in the Russian state-run Rossiyskaya Gazeta, Xi said that this year not only marks 80 years since the end of World War II and the founding of the UN, but also “Taiwan’s restoration to China.” “A series of instruments with legal effect under international law, including the Cairo Declaration and the Potsdam Declaration have affirmed China’s sovereignty over Taiwan,” Xi wrote. “The historical and legal fact” of these documents, as well
RSS