KKR consortium to buy Taiwanese chemicals firm LCY for US$1.5 bn

A consortium led by US private equity firm KKR & Co is to acquire Taiwanese speciality materials maker LCY Chemical Corp for US$1.56 billion. The investment is said to be the largest private equity-backed transaction in the island, according to Thomson Reuters.

KKR is leading a group of investors including LCY’s employees and certain family members of its founders. It will fork out US$1.83 per share, representing a 17.3% premium to LCY’s closing price on July 20. Upon completion, KKR will hold a majority and controlling interest in LCY.

Previously, KKR invested in Taiwanese electronics component maker Yageo Corp in 2007 and made a buyout offer for the company four years later, which was rejected by Taiwanese regulators.

TH Hong, Chairman of LCY, said, “The proposed transaction delivers meaningful and immediate value to our shareholders, while also providing greater access to capital, operational resources and the time horizon needed to execute a strategy to drive long-term, sustainable value creation. KKR is the ideal partner to help us build on our 50-year track record of producing high-quality chemical products for customers worldwide and take LCY to its next level of growth given KKR’s focus on responsible business and operational excellence. KKR’s decision to partner with us is a testament to the innovative and talented team we have built in Taiwan – and around the world – and we look forward to working with them to build an even stronger company.”

Founded in 1965, LCY is a producer of specialty chemicals with a concentration on thermoplastic elastomers and performance plastics used in infrastructure, health care, household, automotive, textile and electronic products, among other diverse applications. LCY will maintain its corporate headquarters in Taipei, its existing global distribution and sales networks and its production plants in Taiwan, China and the US.

KKR is a global investment firm with over 42 years of experience partnering with management teams. Following completion of the transaction, KKR says it intends to work closely with LCY's existing management team and employees to strengthen the company's business platform by exploring expansion opportunities in new and existing international markets as well as penetrating new verticals, with a goal to grow and support employment in Taiwan and overseas.

The transaction is expected to close in the fourth quarter of 2018, subject to customary closing conditions and regulatory approvals. Upon the completion of the transaction, LCY will become a private company, and its shares will no longer be traded on the Taiwan Stock Exchange.

(PRA)

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