Lungyen denies CNS acquisition report rumors
By Christine Chou, The China Post January 12, 2017, 12:04 am TWN
A joint plan between Far Eastone Telecommunications (遠傳電信) and Morgan Stanley's private equity arm to acquire Taiwan's largest cable TV operator China Network Systems (CNS, 中嘉網路) has reportedly failed, as new reports of a new buyer have emerged.
Far Eastone said Wednesday it reached out to the seller to confirm the news report, as well as to ensure them that they had not withdrawn from the deal.
The telecoms company also expressed hope that the National Communications Commission (NCC) would give them the regulatory green light soon.
"This acquisition is the biggest foreign investment deal the nation has seen in recent years. We hope it can be seen in a fair, objective light as it would help the development of digital convergence in Taiwan," Far Eastone's statement read.
Local newspaper Economic Daily News reported CNS' majority shareholder MBK Partners, a Korea-based private equity fund, expects Morgan Stanley Private Equity Asia (MSPE Asia) to withdraw from the acquisition since they believe the deal "will never receive regulatory approval."
MBK Partners has reportedly been looking for other investors, reports have suggested. Cable-TV operator Da Feng and funeral service provider Lungyen Group (龍巖集團), owned by Lee Shih-tsung (李世聰), have been named as potential local bidders.
Lungyen representatives later denied the rumors.
The acquisition triggered controversy as it would mark a step toward consolidating Taiwan's telecommunications industry, allowing Far Eastone — the country's third largest operator — to bundle its mobile phone services with CNS' cable and broadband offerings to its subscribers.
Far Eastone has faced obstacles already, since the Taiwanese government is a direct and indirect funder of the firm.
The Cable Broadcasting and Television Act (有線廣播電視法) bans political parties, the government and the armed forces from owning stakes in cable television.
The NCC granted conditional approval to the telecom firm's plan to invest in CNS via corporate bonds worth up to NT$17.12 billion on Jan. 27, 2016.
But last September, the Investment Commission asked the newly-selected NCC committee members to re-examine the case over "suspicions that Far Eastone has attempted to evade restrictions by purchasing CNS through corporate bonds rather than stocks."
In 2015, Far Eastone reached an agreement with MSPE Asia to buy corporate bonds issued by MSPE Asia's local subsidiary North Haven Private Equity Asia IV (NHPEA). NHPEA would in turn purchase a 60 percent stake in CNS.
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