KKR will acquire embattled Taiwanese firm LCY

Abstract

The private equity firm KKR will pay $1.5 billion to acquire LCY Chemical, a Taiwanese producer of thermoplastic elastomers, specialty polymers, fibers, and industrial chemicals. An underground gas pipeline owned by LCY blew up in 2014 in a residential neighborhood in Kaohsiung, Taiwan, killing 32 and injuring 300. The firm denies responsibility for the accident. In May, a Kaohsiung court sentenced the former chairman of LCY, Bowei Lee, to four years in jail, but he is appealing the sentence. KKR is buying LCY’s shares at a 17% premium to their value on July 20, their last day of trading before the deal was announced. LCY’s shares lost over half their value after the 2014 explosion but gradually recovered to exceed their preblast price. LCY says the stable financing provided by KKR will enable it to implement a long-term expansion strategy. In 2014, before the Kaohsiung tragedy, the U.S. firm Kraton