Taiwan Today

Taiwan Mobile Co. Ltd. announced Sept. 16 that it will buy up the Carlyle Group’s stake in local cable television operator Kbro Co. for NT$32.8 billion (US$1 billion). Under the deal, Taiwan Mobile will also assume a debt of NT$24 billion from the Carlyle Group, a global private equity investment firm based in Washington, D.C. With total consideration of NT$56.8 billion, the deal represents Taiwan’s largest merger and acquisition case in the last 18 months and the second biggest in Asia recently. According to the deal, Taiwan Mobile will acquire Kbro’s 1.1 million cable TV subscribers, which, based on the total amount the telecom operator is shelling out for the Carlyle Group’s stake, translates into about NT$51,600 per customer—marking a record high. Taiwan Mobile’s board of directors approved the deal at a meeting on the morning of Sept. 16. Richard Tsai, the company’s chairman, signed an agreement with Gregory M. Zeluck, Carlyle Group’s managing director, at noon the same day. The two sides expect to conclude the deal before the end of this year. Under the agreement, Taiwan Mobile will provide 589 million treasury shares and pay NT$440 million in cash to the Carlyle Group for the Kbro purchase. After the transaction, the Carlyle Group will own a 15.5 percent stake in Taiwan Mobile and hold two seats on its board of directors, making it the second largest institutional stakeholder in the company. The Tsai family, which runs the Fubon Group, holds an 18.2-percent stake in the telecom operator. According to reports, the Tsai family pushed hard to limit the Carlyle Group’s stake in order to maintain its status as the main stakeholder. The decision to pay NT$440 million in cash was made with this consideration in mind. Carl Chien, head of JPMorgan Chase & Co.’s Taiwan operations, said that as many adjustments need to be made before the deal is finalized, the total price tag could rise to as high as NT$59.7 billion. Tsai noted that the two sides held talks for more than two years before arriving at an agreement. After it is finalized, Taiwan Mobile will become the largest cable television operator in the country. In the future, he said, the company will work to develop the digital TV and interactive TV platforms. He added that Taiwan Mobile will have more competitive strength in taking on Chunghwa Telecom Co. Ltd., the nation’s biggest telecom operator. (SB)