Regulator Expresses Concern About KKR Buyout of Yaego

Taiwan's financial regulator is raising concerns about KKR's (NYSE: KKR) planned $1.6 billion buyout of Taiwan electronics components maker Yageo. The Financial Supervisory Commission is concerned that the deal's debt ratio is too high and that and the rights of minority shareholders haven't been sufficiently protected.

The commission itself doesn't have the authority to block a deal. The Ministry of Economic Affairs will have the final say on whether to approve KKR's deal by June 24. At that time, KKR will have the choice of a second and final extension or walking away from the deal for a year.

Bankers backing the deal feel the debt levels are reasonable and the regulator's concerns were misplaced. One banker pointed to KKR's track record on buyouts: its portfolio companies weathered the financial crisis well due in part to the firm's cautiousness about the amount of debt it uses in its acquisitions.

Taiwan's regulators have something of a reputation for being picky when it comes to private equity firms, which are seen as interested mainly in making a quick profit.