MBK wins auction for CNS in Taiwan

China Network Systems (CNS) has confirmed that MBK Partners is the winning bidder in an auction to buy 60% of the company. The price is not known but media reports speculate that it is around NT$50 billion ($1.5 billion).

MBK Partners is a Korea-based private equity fund founded by Michael Kim, the high-profile figure who was previously head of Carlyle in Asia.

CNS is 80% owned by Taiwan's Koo family with the balance held by News Corp (Star Group). It is TaiwanÆs second largest cable company measured in terms of revenues and subscribers. Carlyle had earlier invested in CNSÆs competitor Eastern Multimedia and it is widely believed that KimÆs familiarity with the sector would have encouraged him to bid aggressively.

Taiwan has a strong cable and satellite television market with one of the highest penetration rates in the region. Recently, the government announced that it will soon relax existing regulations that inhibit the ability of cable television companies to expand services and increase revenues.

The auction for CNS had been keenly contested with a great deal of private equity interest. Others to take a look at the company include Newbridge Capital, Macquarie, KKR and Goldman Sachs private equity.

CNS is being advised on the sell-side by Morgan Stanley and MBK by Merrill Lynch. Both advisors declined any comment. An interesting aspect of the deal - and one which is now being highlighted - is who will arrange the fairly hefty quantum of debt financing which MBK will require. It is believed that thanks to Taiwan licensing issues Merrill Lynch will not arrange the financing. Some observers reckon it is more likely that a firm such as Citigroup could arrange this aspect of the deal.