KKR-LED GROUP BUYS LCY CHEMICAL
T$47.8b takeover part of efforts for ‘healthy balance’ between transactions involving controlling stakes and minority deals
KKR & Co said it is taking over Taipei-based LCY Chemical Corp in a deal valued at T$47.8 billion (RM6.24 billion), part of a quest by the global buyout firm for more transactions involving controlling stakes in the Greater China region.
A consortium led by New Yorkbased KKR agreed to acquire all of LCY’s shares for T$56 each, a 17.3 per cent premium to Friday’s close. LCY shares jumped the 10 per cent daily limit in Taipei yesterday to T$52.50.
The LCY deal was part of KKR’s effort to achieve a “healthy balance” between transactions in Greater China involving controlling stakes and minority deals, said Paul Yang, the buyout firm’s Greater China chief executive.
Many of KKR’s previous deals in the region had involved minority shareholdings, he added.
The transaction is KKR’s second in Taiwan following the purchase of US$230 million (RM920 million) convertible bonds in Yageo Corp in 2007.
However, KKR’s subsequent attempt to take over the electronicparts maker was rejected by regulators in 2011.
“This is significant for KKR because we’re returning to Taiwan,” said Yang.
“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 said he saw opportunities to invest in Taiwanese firms with a market value of between US$2 billion and US$5 billion, citing strong cash flows, reasonable valuations, and a favourable financing environment.
The KKR-led consortium, which includes LCY employees and certain LCY founding family members, plans to help the firm expand in international markets through mergers and acquisitions.
LCY has production plants in Taiwan, mainland China and the United States.