EQT to sell Taiwan cable TV network to Formosa Plastics
EQT Partners will sell Taiwanese cable TV network Gala Television Corp. to domestic conglomerate Formosa Plastics Group.
Formosa confirmed that it would buy the private equity firm's approximately 95% interest in Gala for an undisclosed sum. Poa-Chuan Lin, CEO of GTV, said two weeks ago that an exit was imminent. Formosa and several local financial investors were said to be in the hunt, with a purported price of NT$6 billion ($200 million).
Formosa stated that one of its subsidiaries would make the investment, and because foreign investors are involved, the transaction requires approval from the National Communications Commission and Investment Commission under the Ministry of Economic Affairs.
Established in 1997, Gala is one of Taiwan's leading TV content providers with four channels carried by all major cable operators. Its content includes in-house produced, commissioned and acquired material. The company's Chinese-language library has proved attractive for both domestic and overseas viewers in places such as China and Southeast Asia.
It reported EBITDA of NT$726 million in 2012, with sales reaching NT$2.2 billion, but the industry as a whole has seen a massive influx in competition following the switch to digital broadcasting, which has put pressure on subscription fees.
Formosa bought a 23% stake in Gala in 2002 for NT$400 million, exiting its holding six years later when North Asia-focused buyout firm MBK Partners bought 70% of the company for $100 million. The remainder was owned by Teng-Kuei Yang, a Taiwan entertainment mogul and ex-Gala chairman, and several local businesses.
EQT teamed up with Lin in early 2011 to acquire undisclosed stakes in the company.
In 2006, MBK bought CNS, Taiwan's largest cable and broadband operator, for $1.5 billion. It is understood to be in the process of selling the asset, with a unit of Hon Hai Precision Industry - a conglomerate best known as Foxconn - reportedly in the running for the asset.
Several previous attempts to exit, including through a sale to Chinese snack food conglomerate Want Want China Holdings, were unsuccessful.
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