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May 28, 2017

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Formosa Plastic skirts regulatory hurdle, buys GTV

TAIPEI, Taiwan -- The National Communication Commission (NCC) yesterday announced that it is assessing the Formosa Plastic Group's (FPG, 台塑集團) bid to acquire Gala Television (GTV, 八大電視) through a newly formed company for about NT$3 billion, stating that its decision on the transaction will be dependent on conformity to regulatory stipulations.

FPG's previous application to acquire GTV through its wholly owned holding company subsidiary was blocked by the NCC in late April, with the regulator citing violations of the Cable Radio and Television Act (有線廣播電視法), which bars companies whose stakeholders include foreign firms, governmental entities, the military and political parties' stakeholders from investing in broadcasting companies.

Various governing bodies and government funds currently hold a 1.15 percent stake on a number of listed companies under the FPG umbrella, including the holding company applying to acquire GTV, according to reports.

In response, FPG's founding family in June formed a new investment company to oversee the acquisition of GTV through a second application to the NCC. The company is bank-rolled by NT$600 million worth of capital from members of FPG's founding family, and is headed by Wang Wen-tsao (王文潮), son of FPG co-founder Wang Yung-tsai (王永在).

Reports indicate that GTV's current stakeholders include Galileo Holding B.V., a Holland-based company holding a 96.5-percent stake, and another company holding a 3.5-percent stake. The Wang family is poised to acquire a 100-percent stake from the companies for NT$2.88 billion, and NT$150 million for about NT$3.03 billion.

The FPG stated that the GTV bid is an investment effort by the Wang family in their personal capacity and unrelated to the company.

Meanwhile, FPG had earlier protested that the company has no control on the investment choices of governing bodies and that it is unreasonable for regulators to block the acquisition of GTV for negligible stakes held by the public sector.

The restrictive clause prohibiting investments in the media broadcasting sector has in the past decade hampered nearly 20 investment bids by enterprises. An amendment to waive investment restrictions on enterprises with less than 5 percent in government stakeholding is currently being reviewed at the Legislative Yuan.

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