KKR’s Yageo offer reflects Taiwan's strength

Orion Investment Co., a newly launched domestic firm jointly owned by KKR and Chen, has made a bid to take Yageo private, offering to purchase 100% of the company's outstanding common shares at NT$16.10 ($.56) apiece. That figure represents a 14% premium over Yageo's last closing price on the Taiwan Stock Exchange, and further represents the highest closing price the e-stock reached since July 2004. UBS is advising Orion on the financial side, while Paul, Weiss, Rifkind, Baker & McKenzie , and Simpson Thacher & Bartlett are the legal advisers.

Prior to the share bid, KKR and Chen jointly controlled 34.3% of Yageo's shares, with KKR entering as an investor four years ago. Chen now looks to hold 55% of the company, leaving KKR with the remaining stake of the firm, which specifically makes pieces such as resistors and high-frequency products for consumer electronics and appliances. With a new management structure, the company hopes to expand to "compete with global leaders," achievable with KKR's additional funding, the company publicly announced.

"Over the last several years, Yageo has experienced growth and successfully established a strong position in the Greater China region. We feel now is the time to take Yageo to the next level," Chen said in a release. "From a long term perspective, the new shareholding structure will enable investments in accelerated high end product development and deeper penetration into western markets, which will complete our transformation into a global leader across our focus products."

The deal would already represent one of the largest PE transactions of the year, which is a title another Taiwanese company, cable provider China Network Systems (CNS), took home in 2010. In October, MBK Partners sold its 60% stake in CNS to the head of Chinese snack food maker Want Want Holdings for $2.4 billion. MBK later exited another Taiwanese media firm, Gala TV, to EQT Greater China, and Carlyle exited cable TV asset Kbro to Taiwan Mobile's Tsai family for $1.2 billion.

However, outside these big-name media deals and other regulated industry such as financial services, private equity investments into Taiwan has been sliding. Yet, with the Economic Cooperation Framework Agreement (EFCA) in action, has resulted in increased interest from Mainland Chinese companies to tap corporate Taiwan for business know-how and capital.

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• Topics
• Greater China
• Technology
• Buyout
• KKR