* Regulator may ask buyers to form independent committees
* Committees would be tasked with ensuring offers are fair
* Regulator seeking better disclosure and protection for
* Yageo shares rebound 2 pct, beating broader market
By Faith Hung
TAIPEI, June 27 Taiwan plans to tighten
processes for tender offers to improve information disclosure
and better protect minority shareholders in the wake of
regulators' rejection of a $1.6 billion management buyout bid of
Yageo backed by KKR & Co .
A regulatory official said on Monday that the measures
planned would include asking buyers to set up an independent
internal committee to assess whether their offer price is fair.
The plan comes after regulators rejected the KKR-backed
deal, citing among other reasons insufficient protection of
minority shareholder rights. The deal was seen by many as a
gauge of how open Taiwan is to foreign takeovers, especially by
private equity firms.
"Yageo's management did not fully explain how they came up
with the offer price and why it was reasonable," said the
official, who requested anonymity as the matter is not public
"We hope in future cases buyers will set up an independent
committee inside the company to make sure those things get done
Taiwan's regulators have built up a reputation among foreign
investors for being picky, especially towards private equity
firms, which they see as interested mainly in making a quick
Foreign firms have struggled in a regulatory environment the
American Chamber of Commerce in Taiwan recently called
American International Group needed almost two years
to dispose of its Taiwan life insurance arm as regulators
rejected one deal and dragged out the review process on a
People with direct knowledge of Taiwan's regulators and
private equity business said after the KKR deal's rejection that
it could mean less involvement by private capital in Taiwan,
since many firms might see it as a "gigantic waste of time".
They said that some private equity firms had been waiting
for the outcome of the Yageo deal before pushing ahead with
their own deals, but it was likely now that those deals would be
off the table.
Regulators have denied that the rejection had anything to do
with the involvement of private equity, and said it should not
hinder foreign interest in Taiwan deals.
But one fund manager disagreed.
"For any M&A deals, any regulatory issue is seen as an
interference. Taiwan should limit that as much as possible,"
said Simon Liu, deputy investment officer of Polaris Group's
The review by the securities bureau of the Financial
Supervisory Commission, the market regulator, is expected to be
completed in days. The findings will then be submitted to an FSC
committee for further discussion.
Shares of Yageo rose 2.1 percent on Monday to T$12.20. They
had fallen some 22 percent in the last two weeks as doubts over
the deal surfaced. The company's founder and KKR had offered
T$16.1 a share to buy out the company.
(Editing by Jonathan Standing)