Taiwan Focus: M&A opportunities and challenges

While recovery from the 2008 financial crisis has been slow, M&A activities in Taiwan have continued to thrive. There have been large-scale M&A transactions involving multinationals and business enterprises, like AIG's sale of its local assets to Nan Shan Life and Mediatek's tender offer for M-Star, which consolidates two major integrated circuit design players in Taiwan. There is also the proposed acquisition of CNS network by Won Won Group, EQT Partners' acquisition of GTV and the sale of the Next Media group, all in relation to the mass media news industry. Foreign investors continue to acquire local companies targeting niche markets. Meanwhile, following the execution of the Economic Cooperation Framework Agreement (ECFA) between Taiwan and the People's Republic of China on June 29 2010, there have been high expectations that more PRC capital would flow into Taiwan for investment and M&A transactions.

Statutory M&A transactions

To conduct M&A transactions in Taiwan, the Mergers and Acquisitions Act provides certain simplified procedures for taking corporate actions and conducting employee transfer. The M&A Act also offers certain tax neutral treatments. The authorities are proposing amendments to the M&A Act to further facilitate M&A transactions in Taiwan. It is anticipated that certain regulatory barriers will be removed after the amendments are enacted. Considering the current version of the M&A Act, to take advantage of the simplified procedures and the relevant tax treatments, the transaction structure must comply with the types of mergers and acquisitions prescribed in the Act.