January 8, 2014 / 9:37 AM / in 4 years

UPDATE 1-Eastern Media bids for Carlyle's stake in Taiwan TV firm-sources

* Huge gaps between prices for Carlyle, Eastern Media

* Eastern Media sees 8 times EBITDA as reasonable-source

* Deal subject to Taiwan regulatory approval

By Faith Hung

TAIPEI, Jan 8 (Reuters) - Taiwan’s Eastern Media International Corp is bidding for Carlyle Group’s entire 61 percent stake in local TV company Eastern Broadcasting, two sources with direct knowledge of the matter said on Wednesday, at a valuation substantially below Carlyle’s expectations.

This is not the first time Carlyle has tried to exit Eastern Broadcasting and not the first time it has struggled to sell an asset in Taiwan, which has fallen out of favour with private equity due to clashes with the country’s regulators.

Eastern Media, the cable TV network’s second-biggest shareholder, sees Carlyle’s stake is worth T$7.2 billion ($240 million), said the sources, declining to reveal the price of Eastern Media’s bid.

The U.S. private equity firm launched the sale of its controlling stake in Eastern last year, seeking as much as $700 million, according to two sources with knowledge of the matter.

“They are asking for such a high price. It is just way too unreasonable...because it’s not going to be easy to find a buyer willing to pay their price,” said one of the sources, speaking on condition of anonymity due to sensitive nature of the matter.


Both Carlyle and Eastern Media declined to comment.

Carlyle invested in the cable TV network in 2006, in part because the island’s cable TV industry offered stable cash flow and advertising revenue. But exiting investments has proved tricky for private equity firms in Taiwan.

MBK Partners also tried to exit its cable TV investment in CNS. Its plan to sell the unit to Want Want Group was turned down by Taiwan regulators and the firm last year hired banks to explore a listing in Singapore through a business trust.

That plan is on hold, according to a source with knowledge of the matter. A similar Singapore listing of a Taiwanese broadcaster by Macquarie Group, Asian Pay Television Trust, has lost 20 percent of its value after the IPO. Asian Pay Television closed at S$0.775 on Wednesday compared to its IPO price of S$0.97.

Eastern Media sees a valuation of eight times Eastern Broadcasting’s earnings before interest, taxes, depreciation and amortization as reasonable, said the source.

Eastern Broadcasting has doubled its earning per share to T$8 in 2013 from a year ago, said the other source.

Carlyle is expected to make a decision on the bid by the end of this month, the sources added.

Any deal is subject to approval from Taiwan’s regulators.

On Wednesday, Eastern Media shares ended down 1.4 percent, lagging the broader market’s 0.5 percent rise.

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