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Taiwan: Navigating regulatory and deal risks in a rapidly shifting landscape

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Cross-border trends for Taiwanese investors and businesses

Executive Summary

Rapid shifts in global regulatory policies and deal trends are creating challenges and tantalizing cross-border opportunities for Taiwanese investors and companies.

By Noah A. Brumfield, Taiwan Practice Head

Halfway through 2018, the world's policy dramas and other disruptions show no sign of slowing. How will the latest global legal changes and market trends affect cross-border business and Taiwan in particular?

Our Taiwan report this year spotlights two appealing opportunities. First, Taiwan's emergence as an exciting energy investment destination may create new openings for Taiwanese companies far beyond the energy sector. In addition, Taiwanese businesses are poised to spend record amounts on overseas M&A transactions and further increase their presence in global M&A markets.

Even some obvious challenges still contain room for optimism. Prudent investment and supply chain strategies can reduce the impact of international trade upheavals on Taiwan-based exporters facing US and China trade policy changes. And Taiwanese businesses that understand shifting geopolitics and financing trends affecting deals in the Asia-Pacific region can unlock funding and capital opportunities.

Several US-centered developments also may be highly relevant for Taiwanese companies engaged in cross-border business. A rare court decision that clarified US merger control rules for vertical deals has provided judicial guidance for transactions involving companies with complementary businesses. A US clampdown on potential security threats is intensifying the scrutiny of cross-border M&A. And Taiwanese companies, already affected by US enforcement actions in recent years, can benefit from making sure all investment strategies and global operations include an assessment of the latest US economic sanctions and export control policies.

We hope you find this useful, and look forward to seeing Taiwanese businesses flourish worldwide in the months and years ahead.

Taiwan's energy renaissance: seizing the opportunity

Taiwan has recently emerged as an exciting new investment destination for international investors and financiers in the energy sector

wind turbines

Taiwanese firms expand their M&A horizons in Q1 2018

While Taiwan traditionally attracts global attention for its semiconductor assets, local firms are increasingly looking to move into markets overseas

Systems Applications and Products in Data Processing

Weathering the storms

Investment and supply chain strategies for a volatile international trade environment

container ship

Asia-Pacific financing trends: Key issues and opportunities for Taiwan

Changing geopolitics and financing flows impact deals in the region

Yuan currency

Rare court decision clarifies US merger control rules for vertical deals

By Noah A. Brumfield and Charles Miller

A recent US district court decision rejecting a US government challenge to the AT&T/Time Warner merger provides judicial guidance for deals involving companies with complementary businesses.

telecommunication tower

Raising the bar for US security clearance of cross-border transactions

A clampdown on potential security threats has increased the scrutiny of participants seeking clearance for cross-border mergers and acquisitions


Taiwanese companies are not insulated from US export controls and economic sanctions

Today’s integrated global supply chains meet enhanced US enforcement against even non-US individuals and entities

colorful pattern

Taiwanese firms expand their M&A horizons in Q1 2018

While Taiwan traditionally attracts global attention for its semiconductor assets, local firms are increasingly looking to move into markets overseas

3 min read

Taiwanese companies are stepping up their presence in the global M&A market. The value of M&A transactions undertaken by local firms investing abroad in 2017 reached a record high, with US$7.25 billion spent across 28 deals. The first quarter of 2018 indicates another record annual deal value may be on its way, with US$2.63 billion already spent on overseas transactions.

While deal volume reached a peak in 2016 with 38 deals announced, 2017 still posted the third-highest annual volume figure on record with 28 transactions.


US$7.25 billion

spent on 28 Taiwan M&A deals in 2017

Big deals but CFIUS looms large

One deal notable for its ambition to build scale and diversify abroad is tech powerhouse Foxconn International Technology's US$866 million planned purchase of US-based Belkin International, announced in March. Through the acquisition, Foxconn will expand its access to brands within the PC/mobile accessories and smart home equipment industries. Foxconn is no stranger to using M&A as a tool to diversify its business. In 2017, the company initiated a US$3.1 billion takeover of Japanese display maker Sharp — the largest announced takeover of a foreign firm by a Taiwanese bidder ever recorded.

Press articles suggest that the Belkin deal will likely need approval from the Committee on Foreign Investment in the United States (CFIUS). The inter-agency committee is reportedly heavily scrutinizing inbound deals — particularly those targeting technology firms. President Trump recently blocked Broadcom's US$142 billion bid for Qualcomm on grounds of national security concerns.


US$2.63 billion

spent on overseas deals in just Q1 2018

TMT draws out Taiwanese dealmakers

Taiwanese companies have traditionally attracted international attention for their prowess in the semiconductor space. Local firms are increasingly looking to gain their own global presence through M&A. In March, Netherlands-based NXP semiconductors sold a 40% stake in Suzhou ASEN Semiconductors Co., Ltd. to Advanced Semiconductor Engineering (ASE), a Taiwanese supplier of semiconductor services, for US$127 million. The joint venture deal gives ASE access to the rapidly growing global semiconductor assembly and test business.

While the TMT sector attracted the highest value of overseas deals from Taiwanese firms between 2016 and Q1 2018 (US$8.06 billion), it was the industrials and chemicals sector that generated the highest number of transactions (25) over the same period. In a further deal wherein a Taiwanese firm planned to expand into the US, Ta Chen Stainless Pipe Co. acquired a 95% stake in Empire Resources in March 2017 for US$177 million. Ta Chen hopes to enlarge the company's operational scale, efficiency and competitiveness in the industry.

A focus of the Taiwanese government in 2018 is to promote industrial competitiveness abroad, with a particular emphasis on advanced manufacturing equipment, advanced electronics, integrated applications in smart systems and 5G. The government is also giving added attention to growth in healthcare, particularly pharmaceuticals and biotech. In support of the government's goal, local firms will continue to look abroad in order to scale up their capabilities and source innovative technologies.

Convergence between the industrials and tech sectors, spurred by the need to stay ahead of competition, should encourage Taiwanese firms to source even more M&A opportunities overseas.

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