Tsai family puts TFN on notice

Taiwan’s Tsai family, which controls one of the island’s biggest conglomerates, plans to complete a restructuring of its non-financial businesses next month through an acquisition of Taiwan Fixed Network.

Taiwan Mobile, part owned by the family, seeks to acquire up to 100 per cent of TFN in a deal that could be worth up to T$54bn ($1.64bn), the island’s third largest mobile operator said on Thursday.

The planned transaction will help untangle a web of cross-shareholdings and create the next big exercise in improving capital management among the island’s cash-rich companies.

United Microelectronics, the world’s second largest contract chipmaker, announced plans in January to return T$57bn to shareholders in what is the island’s largest capital reduction so far. This followed similar announcements by several other companies late last year.

As Taiwan’s listed companies, dominated by technology firms, come under increasing pressure to better manage their cash, the island’s three largest telecom companies have also been seen as top candidates for capital management.

Taiwan Mobile said it would use T$12.74bn of its cash pile for the acquisition.

It already owns a 10 per cent stake in TFN, which in turn owns 30 per cent of Taiwan Mobile. Fubon Group companies and members of the Tsai family are shareholders in both companies.

Taiwan Mobile said it would launch a tender offer to TFN shareholders on Friday to buy their holdings at T$8.3 per share– a 10.7 per cent premium over Thursday’s closing price. The company plans to acquire at least an extra 41 per cent of TFN, which would give it an absolute majority of the fixed-line operator, and up to 100 per cent before April 11.

“The deal looks good to me,” said Dominic Grant, an analyst at Macquarie Securities in Taipei.