Carlyle gets green light on Kbro sale

Global private equity firm The Carlyle Group has finally got the go ahead to sell Taiwanese cable television operator Kbro to the country’s Tsai family in a deal worth around $1.19bn.

The Carlyle Group has finally secured an approval from the National Communications Commission (NCC) of Taiwan on its sale of Taiwanese cable television operator Kbro to the country’s wealthy Tsai family.

NCC, the key regulator from whom approval is needed, announced yesterday the approval of the deal, which is worth TWD36.1 billion (€875.8 million; $1.19 billion), on the fulfillment of certain conditions from the Tsai family.

Among the 15 conditions the regulator agreed with the Tsai family are a post-acquisition investment of TWD5.2 billion to digitalise Kbro and a decrease in fees for Kbro’s services.

The approval from NCC enables Carlyle to finally divest its 2006 investment after over a year of stalling. At the end of last month, Taiwan’s Fair Trade Commission (FTC) also gave a green light on the transaction.

Carlyle acquired kbro for an undisclosed sum in July 2006. The investment was made out of Carlyle Asia Partners II.

In September last year, Carlyle agreed to sell Kbro to the Taiwan Stock Exchange-listed Taiwan Mobile for TWD440 million of cash and a 15.5 percent stake in the mobile carrier. The transaction was valued at TWD32.8 billion at the time, including consideration of Kbro’s TWD24 billion of debt.

However, a Taiwanese law that bans state ownership of media entities delayed the deal, as the Taipei city government holds an indirect stake in Taiwan Mobile. In a restructuring of the deal in July to get round the hurdle, the Tsai family agreed to buy Kbro directly rather than through Taiwan Mobile.

In October, NCC said it needed more time to collect opinion from the public and media specialists to hold further discussion on the sale as the regulator reportedly had concerns around issues of competitiveness.

“[NCC] had concerns about whether the buyer would compete fairly in the market and would be committed enough to digitalise Kbro,” an unnamed government source was quoted as saying in Reuters at the time.

The long-awaited approval bodes well for MBK Partners’ proposed sale of Taiwanese cable broadcaster China Network Systems (CNS) to a consortium led by food conglomerate Want Want. The deal was struck at the end of last month and Want Want reportedly agreed to pay MBK $1.4 billion for its 60 percent holding, in addition to assuming some $1 billion in debt.

The transaction is also subject to approval by NCC, which did not provide information on when the case will be discussed.