Market Overview

Proposed Acquisition of LCY Chemical Corp. by KKR Consortium

Share:

Shareholders to Receive TWD 56 Per Share in Cash, a 17.28% Premium to
July 20 Closing Price

Existing Management Team Will Continue to Lead Company with Support
from KKR

Partnership Provides Greater Access to Capital and Operational
Resources to Undertake Growth Opportunities in Taiwan and Around the
World

LCY Chemical Corp. ("LCY" or the "Company") (TPE: 1704) and global
investment firm KKR today announced the signing of a share exchange
agreement for a consortium led by KKR to acquire all of the issued and
outstanding shares of LCY for TWD 56 per share in cash, adjusted to
include a TWD 2.90 per share dividend (rounded to the nearest TWD 0.01)
(ex-dividend offer price is TWD 53.10 per share). The transaction, which
has been unanimously approved by the board of directors of LCY upon the
recommendation of its Audit Committee comprising independent directors,
represents a total market capitalization of approximately TWD 47.8
billion (USD 1.56 billion).

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180722005024/en/

The offer price represents a premium of 17.28% to LCY's closing price on
20 July 2018, the last trading day prior to the transaction
announcement. It also represents a premium of 19.2%, 23.0% and 24.3%
over the 30-day, 90-day and 180-day average closing prices, respectively.1

Mr. TH Hong, Chairman of LCY, said, "The proposed transaction delivers
meaningful and immediate value to our shareholders, while also providing
greater access to capital, operational resources and the time horizon
needed to execute a strategy to drive long-term, sustainable value
creation. KKR is the ideal partner to help us build on our 50-year track
record of producing high-quality chemical products for customers
worldwide and take LCY to its next level of growth given KKR's focus on
responsible business and operational excellence. KKR's decision to
partner with us is a testament to the innovative and talented team we
have built in Taiwan – and around the world – and we look forward to
working with them to build an even stronger company."

Mr. Paul Yang, Member and Head of KKR Greater China, said, "LCY is a
global leader in the specialty chemical industry and has earned its
place as one of Taiwan's leading global companies. We believe that KKR's
partnership approach will enable LCY to make the necessary investments
in R&D and other growth initiatives to maintain the technological
capabilities, capacity and product differentiation needed to further the
Company's leadership position going forward. This is an exciting
opportunity to work alongside LCY's exceptional management and dedicated
employees to help the Company take full advantage of the opportunities
that lie ahead."

Founded in 1965, LCY is a producer of specialty chemicals with a
concentration on thermoplastic elastomers and performance plastics used
in infrastructure, health care, household, automotive, textile and
electronic products, among other diverse applications. LCY will maintain
its corporate headquarters in Taipei, its existing global distribution
and sales networks and its production plants in Taiwan, mainland China
and the United States.

KKR is a global investment firm with over 42 years of experience
partnering with management teams and helping them to create value as a
long-term, patient investor. Following completion of the transaction,
KKR intends to work closely with LCY's existing management team and
employees to strengthen the Company's business platform by exploring
expansion opportunities in new and existing international markets as
well as penetrating new verticals, with a goal to grow and support
employment in Taiwan and overseas. KKR also looks to enhance the
Company's approach to environmental, social and governance management to
responsibly and sustainably grow LCY's corporate value.

Immediately following consummation of the share swap, KKR will hold a
majority and controlling interest in LCY. The KKR consortium includes
participation by the Company's current employees and certain members of
the Founding Family.

KKR makes its proposed investment from its Asian Fund III. The
transaction is expected to close in the fourth quarter of 2018, subject
to customary closing conditions and regulatory approvals. Upon the
completion of the transaction, LCY will become a private company, and
its shares will no longer be traded on the Taiwan Stock Exchange. KKR
and its partners are committed to supporting LCY's global expansion and
will evaluate a range of options to support the Company's strategy,
including capital market activities in Taiwan.

Baker & McKenzie is acting as legal advisor to the Company. Simpson
Thacher & Bartlett and Lee & Li are acting as legal advisors to KKR and
the consortium. Goldman Sachs (Asia) L.L.C. is acting as financial
advisor to KKR. Goldman Sachs Bank USA has agreed to underwrite and
arrange debt financing to the consortium for the share exchange
transaction, subject to certain customary conditions.

About LCY Chemical Corp.

Founded in 1965, LCY CHEMICAL CORP (TWSE:1704) aims at improving the
quality of life and has been in petrochemical business for more than 50
years. Product portfolios include methanol, solvents, electronic-grade
chemicals, rubbers and performance plastics. For more details, visit LCY
CHEMICAL CORP. website: http://www.lcygroup.com/lcy/en/.

About KKR

KKR is a leading global investment firm that manages multiple
alternative asset classes, including private equity, energy,
infrastructure, real estate and credit, with strategic manager
partnerships that manage hedge funds. KKR aims to generate attractive
investment returns for its fund investors by following a patient and
disciplined investment approach, employing world-class people, and
driving growth and value creation with KKR portfolio companies. KKR
invests its own capital alongside the capital it manages for fund
investors and provides financing solutions and investment opportunities
through its capital markets business. References to KKR's investments
may include the activities of its sponsored funds. For additional
information about KKR & Co. Inc. (NYSE:KKR), please visit KKR's website
at www.kkr.com and
on Twitter @KKR_Co.

Forward-Looking Statements

This press release contains forward-looking statements, including but
not limited to statements about completing the proposed transaction on
the terms and timetable described above, and strategic or other
potential benefits of the proposed transaction. Words such as "will,"
"believes," "expects," and "future" or similar expressions are intended
to identify forward-looking statements. These forward-looking statements
are subject to the inherent uncertainties in predicting future results
and conditions. Certain factors could cause actual results to differ
materially from those projected in these forward-looking statements, and
investors should not place undue reliance on such statement. These
forward-looking statements speak only as of the date of this press
release, and KKR and the Company do not undertake any obligation to
update or revise any of the forward-looking statements to reflect future
events or circumstances, except as required by law.

1 The figures set out above are based on Bloomberg data as of
the last full trading day immediately prior to the date of the announced
share swap.

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