Taiwan’s Fair Trade Commission approves Far EasTone, CNS deal

5 Jan 2016

Taiwan’s Fair Trade Commission (FTC) has reportedly given its approval to a proposed deal which could act as a precursor to Far EasTone (FET) eventually acquiring a larger stake in the country’s largest cable TV operator China Network Systems (CNS). According to Focus Taiwan, the antitrust watchdog said that, after reviewing the initial deal, it was satisfied there were currently no competition concerns, though the approval has been issued conditionally on the maintaining of competition in the future.

In July 2015 FET inked an agreement with Morgan Stanley Private Equity Asia (MSPE Asia) to buy bonds to be issued by the latter company’s MSPE Asia unit North Haven Private Equity Asia IV (NHPEA), which would in turn acquire a 60% stake in CNS from South Korean private equity firm MBK Partners. However, as government agencies currently hold a 2.89% stake in FET, the company must currently abide by existing regulations that bar political parties, the government and the military from having stakes in media entities. As such, the bond purchase strategy is expected to help it skirt such rules in preparation for a future acquisition of a stake in CNS if such regulation is removed. In issuing approval for the deal, meanwhile, the FTC said that FET must not take more than 50% of the seats on the CNS board of directors on the back of the bond purchase, while it also should not directly or indirectly have a say in the cable TV company’s operations or management reshuffles. If FET does violate any of the conditions imposed by the FTC then it will reportedly face a fine of up to TWD50 million (USD1.51 million).

Taiwan, China Network Systems (CNS), Far EasTone (FET) (incl. NCIC)