Taiwan blocks KKR’s $1.6bn Yageo takeover

Taiwanese regulators have blocked KKR’s $1.6bn acquisition of electronics components maker Yageo alongside the company’s management, in a move likely to raise concerns for other buy-out houses eyeing the region.

According to Reuters, the Taiwanese Investment commission made the decision after meeting with the market regulator and other government bodies, stating that minority shareholders had not been given enough information to judge if the offer was fair, or if the deal involved too much debt.

Taiwanese regulators tend to be suspicious of private equity, often viewing them as profiteers. Carlyle, which recently suffered a year-long delay for the approval of its sale of local cable television company kbro, had its attempt to buy IC testing and assembly company ASE blocked in 2006.

Other private equity firms are said to have been using the Yageo takeover as a test case, awaiting the outcome of the regulatory scrutiny given to the deal before going ahead with deals of their own.

Founded by Chen in 1977, Yageo produces electronic components like resistors, capacitors, ferrites and inductors. It employs over 10,000 people.

KKR bought $250m of the company’s convertible bonds in 2007, giving it an effective 20 per cent stake, and has worked closely with the management since.

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