Taiwan group sets $2 bln China Network buy: source

By Michael Flaherty and Denny Thomas

HONG KONG (BestGrowthStock) – A Taiwan-based consortium led by Want Want Holdings has agreed to buy Taiwan cable operator China Network Systems (CNS) for more than $2 billion from buyout group MBK Partners, a source familiar with the matter told Reuters on Monday.

The deal is likely to revive more sales from private equity portfolios in Taiwan.

North Asia-based private equity fund MBK had bought CNS in 2007 for $1.5 billion. Australian investment bank Macquarie Group Ltd (MQG.AX: ), and a consortium made up of Taiwan conglomerate Ruentex Group and private equity fund Permira (PERM.UL: ) had submitted second-round bids rivaling the Taiwan-based consortium, a source previously told Reuters.

Want Want Holdings is Taiwan’s largest rice cake and flavored beverage maker.

The auction had attracted interest from buyout funds and trade players as the Taiwan cable market offers one of the highest profit margins in the Asia-Pacific region, analysts say.

The business generates strong and steady cash-flow as the cable penetration rate in Taiwan is above 80 percent.

MBK’s successful exit from CNS is expected to encourage several other private equity funds to explore the sale of their businesses, either through a stock market float or through a secondary sale to other buyout groups.

MBK’s sale is among the biggest private equity exits in Asia this year. Earlier this year, TPG sold its entire stake in Ping An Insurance Co Ltd (2318.HK: ), raising about $2.25 billion in two separate sales, which was the biggest private equity exit in Asia this year.

But Taiwan has been a tough market for private equity to crack. Carlyle Group is still waiting to exit another cable business, Kbro. Buyout groups have also suffered from their investments in Taiwan banks as their stock prices are trading far below their entry levels.

Carlyle, SAC Capital, Longreach and Newbridge Capital (NB.UL: ) are all thinking about options to exit from Ta Chong Bank (2847.TW: ), Cosmos Bank (2837.TW: ), EnTie Bank (2849.TW: ) and Taishin Financial (2887.TW: ), respectively, sources have previously told Reuters.

Other private equity exits waiting to happen in Asia, include Lone Star’s (LS.UL: ) 51 percent stake sale in Korea Exchange Bank (004940.KS: ), valued at more than $4 billion.

Morgan Stanley (MS.N: ) (Read more about the money market today. ) was advising MBK.

Want Want Holdings and MBK could not be reached for comment.

(Reporting by Michael Flaherty and Denny Thomas in Hong Kong; editing by Gerald E. McCormick)

Taiwan group sets $2 bln China Network buy: source