UPDATE 3-Carlyle sells Taiwan TV unit for $1.25 bln -sources

* Including debt, deal valued at around $1.9 bln

* Deal seen positive for sale of rival CNS by MBK

* Kbro deal marks 11 times EBITDA vs about 10 times for CNS

* Taiwan Mobile shares up 1 pct, outperform main index
(Adds comments throughout, details)

By Faith Hung and Denny Thomas

TAIPEI/HONG KONG, July 26 (BestGrowthStock) – The Carlyle Group
[CYL.UL] has agreed to sell Kbro, Taiwan’s largest cable TV
operator, to the controlling shareholder of Taiwan Mobile
(3045.TW: ), for about $1.25 billion, sources with direct
knowledge of the situation said on Monday.

Buyers are interested in Taiwan’s cable TV industry because
it generates strong, stable cash flows, while telecom operators
are also seeking TV assets to offer content and compete with
industry leader Chung Hwa Telecom (2412.TW: ).

Taiwan Mobile had agreed to buy Kbro in September 2009 but
its deadline lapsed last month, hit by a Taiwan law that banned
state ownership of media entities. [ID:nTOE65T027]

In a restructuring of that deal, the Tsai family, which
controls Taiwan Mobile, would pay about T$40 billion ($1.25
billion) and assume Kbro’s debt of more than T$20 billion, the
sources said.

The deal not only opens another way for the Tsai family to
own Kbro through a private company, but is also seen as a
positive move for the upcoming sale of private equity firm MBK
Partners’ Taiwan cable asset, China Network Systems Co. Sources
say MBK is seeking around $2 billion for CNS, including debt.

“The Tsai family sees cable TV as an investment with strong
potential. They can choose between Kbro and CNS. And the most
sensible choice is Kbro,” said one source in Taipei, who like
other sources, asked for anonymity because he was not
authorised to speak to the media.

The Kbro deal, pending Taiwan regulatory approval, marks a
multiple of 11 times EBITDA (earnings before interest, tax,
depreciation and amortisation), two sources said.

“Some people have been giving a hard time to MBK for their
valuation expectations, but this completely validates it,” said
another source in Hong Kong.

CNS was being shopped around for 10 times EBITDA, though
some potential investors have balked at the asking price.

A successful exit from Kbro or CNS would be an encouraging
step for global private equity investors in Taiwan, where they
have struggled to recoup their investments in several banks.

Carlyle and the Tsai family signed a contract last week on
the deal, said one source in Taipei.

Carlyle declined to comment.


Fubon Fianncial (2881.TW: ), which is also controlled by the
Tsai family, said the acquisition of Kbro by the family was an
option but had not been finalised.

“There is no way to break the regulation,” Fubon Financial
chairman Daniel Tsai told reporters on the sidelines of a
business event.

But the Tsai family’s acquisition of Kbro also means
reduced competition for the potential sale of CNS, as Taiwanese
regulators are unlikely to allow the Tsai family to own two
dominant cable assets.

Private equity funds Bain Capital, Blackstone Group and
Providence Equity Partners are among the buyout groups that are
likely to show an interest in the sale of CNS, sources have
previously told Reuters. [ID:nRLP96008a]

Australian investment bank Macquarie Group Ltd (MQG.AX: ) and
Taiwan conglomerate Ruentex Group are also expected to express
an interest, sources added.

The first round of bids for CNS are due by mid-August.

Shares of Taiwan Mobile ended up 1 percent, outperforming
the main index’s (.TWII: ) 0.3 percent rise.

Stock Market Today

(Additional reporting by Rache Lee in Taipei; Editing by Ken
Wills and Lincoln Feast)

UPDATE 3-Carlyle sells Taiwan TV unit for $1.25 bln -sources