KKR & Co. has recently announced that it is taking over a Taipei-listed LCY Chemical Corporation in a USD 1.56 billion stock deal. Reportedly, KKR will pay T$56 ($1.83) per share, that represents a 17.3% premium to LCY’s stock closing price on 20th of July.
If sources familiar with the matter are to be believed, the LCY deal comes on the heels of KKR’s effort in achieving a “healthy balance” between transactions in Greater China that comprise controlling stakes and other minority deals. For the record, many of the pervious deals of the KKR in the region have involved minority shareholdings.
Following the purchase of USD 230 million of convertible bonds in electronics component maker Yageo Corp. in 2007, this recent transaction of LCY Chemical is likely to be KKR’s second in Taiwan, cite sources. However, in 2011, KKR’s attempt to acquire the electronic-parts maker was rejected by the regulators.
It has been reported that the investment in LCY will be made via KKR’s USD 9.3 billion Asian Fund III, raised last year in June and presently the biggest private equity fund for the region.
For those uninitiated, established in 1965, LCY manufactures specialty chemicals that are focused on performance plastics and thermoplastic elastomers used in a myriad product portfolios. According to a statement, LCY’s board members has approved the deal with KKR and post completion of the transaction, the specialty chemical maker will be delisted.
Paul Yang, the buyout firm’s Greater China CEO, was quoted stating that this is a significant deal for KKR to expand in the Taiwan market. He further added that China has been a substantial growth ground for its Asia portfolio, however, the Taiwan market is expected to be bestowed with greater scope & opportunities.
According to a press release, LCY shares scaled the 10% daily limit in Taipei to NT$52.50.