Taiwan Mobile Announces Acquisition of Kbro

Taipei, Sept. 17, 2009 (CENS)--Taiwan Mobile announced the acquisition of Kbro Co., Ltd., Taiwan's second largest cable-TV operator, yesterday (Sept. 16) at NT$56.8 billion, thereby boosting its share in the local cable-TV market to one third, the largest.

The board of directors of Taiwan Mobile approved the deal yesterday morning, for which Taiwan Mobile will pay NT$32.8 billion, mainly via share swap, and take over NT$24 billion debt owed by Kbro. Richard Tsai, chairman of Taiwan Mobile, and Gregory Zeluck, managing director of Carlyle Group, the controlling shareholder of Kbro, subsequently inked the contract for the deal at noontime. The deal poses as the largest M&A (merger and acquisition) case in Taiwan as well as the second largest in Asia, in the recent 18 months,.

Richard Tsai commented that the deal, concluded after two years of negotiation, will enable Taiwan Mobile to obtain a head start in the march towards the digital-convergence era, for which the company will continue to develop the new platforms of digital TV and interactive TV. It will also endow the company the strength to challenge the championship of state-run Chunghwa Telecom in the telecommunications market.

With the deal, Taiwan Mobile will become the champion in the local cable-TV market, boasting 1.64 million subscribers, one third of the island's total 4.9 billion subscribers, including 540,000 originally owned by Taiwan Fixed Network & TFN, a subsidiary of Taiwan Mobile, and 1.1 million of Kbro. It will overtake China Network Systems, which owns 1.23 million subscribers or 23% market share. Taiwan Mobile pays NT$51,600 per subscriber to Kbro, beating the previous high of NT$47,000 per subscriber paid by MBK, a Korean private equity fund, for acquiring China Network Systems.

Taiwan Mobile will buy out the cable-TV operation and channel agency of Kbro from Carlyle Group with 589 million treasury-stock shares of Kbro, based on NT$55 per share, plus NT$440 million of cash. The price represents 6% premium over the closing price of NT$51.9 per share of Taiwan Mobile on Sept. 15. The stock price rose NT$0.6 to NT$52.5 yesterday.

The deal will enable Carlyle to own 15.5% stake in Taiwan Mobile, the second largest, trailing Fubon Group owns 27.5% in Taiwan Mobile, including 18.2% held by the group's Tsai family and 9.3% by Fubon Financial Holding. Carlyle will obtain two seats on its board of directors and Gregory Zeluck is expected to become Taiwan Mobile's vice chairman.