Oaktree Capital Management, an independent investment manager that manages a variety of global alternative asset funds, has launched a tender offer to buy Taiwan-listed Fu Sheng Industrial. Oaktree is offering NTD 37.50 ($1.22; €0.83) for each share in a transaction worth $1 billion, including debt.
Fu Sheng, which manufactures golf heads and air compressors, is 46.8 percent held by Lee Hou Teng, the founder, and his family members. The family has agreed to tender their shares, following which they will reinvest in a privatised entity, at a subscription price equal to that paid by Oaktree funds.
Bill Kerins, managing director of Oaktree Capital in Hong Kong told PEO the funds’ total equity investment will amount to $335 million to $340 million, for a 46.8 percent stake.
Oaktree has established a new Taiwan company to launch the tender offer for Fu Sheng shares and will be investing via a number of funds it currently manages. Upon the completion of a successful acquisition, Oaktree will control a similar percentage stake as the founding Lee family. The remaining stake will be held by the company’s management, Kerins said.
Oaktree’s offer represents a 15.7 percent premium over the company’s average 30-day closing price, and a 14.3 times multiple of Fu Sheng’s earnings per share in 2006.
Kerins said he expects scrutiny from Taiwanese regulators. But he said Fu Sheng is a relatively small company compared to the semiconductor giant Advanced Semiconductor Engineering, which The Carlyle Group recently failed to take private.
Kerins said Oaktree has known Fu Sheng for a few years and has had a working relationship with the Lee family for a while before approaching it with a global strategy for its business.
Oaktree Capital recently appointed a chairman in Asia, as a prelude to closing an Asia private equity fund. The firm anticipates having over $1.5 billion available for private equity investments in the region.