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Taiwan's Tsais in Talks to Buy Kbro Cable TV to Work Around State Rules
Taiwan’s Daniel and Richard Tsai are in talks to buy cable TV operator Kbro Co. from Carlyle Group after government regulations delayed a deal for Taiwan Mobile Co., which they control, to buy the company.
“This is the direction we are heading and this is the option we are exploring with Carlyle,” Daniel Tsai, vice chairman of Taipei-based Taiwan Mobile said today. He denied an Economic Daily News report today that his family had completed a deal to buy Kbro for NT$65 billion ($2 billion).
Taiwan Mobile, the country’s second-largest phone operator, hasn’t won government approval after agreeing to buy Kbro in September last year for NT$32.8 billion in stock and cash, and the assumption of NT$24 billion in debt. Buying Kbro directly may allow the Tsai family to work around a law that prevents government ownership of media, Tsai said today.
Tsai declined to comment on the value of the deal or whether his family may set up a separate company to make the transaction.
Taiwan Mobile is minority owned by the Taipei City Government, meaning the carrier can’t buy Kbro under the current rules.
The acquisition of Kbro, with 1.7 million subscribers, would allow Taiwan Mobile to pass China Network Systems Inc., controlled by MBK Partners Ltd, and Taiwan Broadband Communications, owned by Macquarie Media Group, to become the largest operator on the island, where more than 80 percent of homes use cable TV.
Fubon Holding
Fubon Financial Holding Co., whose board is chaired by Daniel Tsai, is the largest shareholder in Taiwan Mobile, which is chaired by his brother Richard Tsai, through its units including Fubon Securities Co. and Fubon Life Insurance Co., according to the Taipei-based phone operator’s website. Fubon is 14 percent owned by the Taipei City Government after Fubon bought the municipality’s Taipei Bank in 2002.
The National Communications Commission is in talks with the Cabinet to allow government-related entities to indirectly own as much as 10 percent of media companies, Commissioner Lee Ta-sung said in April.
Taiwan Mobile declined to comment in a statement today, saying it’s a private matter involving the Tsai family. The deal would have no effect on Taiwan Mobile’s credit or capital, it said. Dorothy Lee, a Hong Kong-based spokeswoman for Carlyle, declined to comment today.
Washington-based Carlyle, the world’s second-largest buyout firm, bought control of Eastern Multimedia, which included the cable TV unit that was renamed Kbro, for $1.5 billion in 2006.
Taiwan Mobile shares have climbed 21 percent since Sept. 16, when the Kbro acquisition was announced, to close at NT$63.30 today in Taipei, outpacing a 4.7 percent advance in the benchmark Taiex index in the period.
To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.
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