China Development Financial Holding Co (中華開發金控) on Thursday said that it is seeking to complete the takeover of China Life Insurance Co (中國人壽) by the end of this year by acquiring all remaining shares of the firm via a share swap.
The companies’ boards of directors approved the proposed share swap, in which one common share of China Life would be exchanged for 0.8 common shares of China Development, plus 0.73 preferred shares of China Development and a cash bonus of NT$11.5 per share, they said.
China Development would issue 2.07 billion new common shares and 1.89 billion new preferred shares that would be exchanged for China Life’s common shares, they said.
Photo courtesy of China Life Insurance Co
China Development said it would consider several options, including issuing corporate bonds, to fund the deal.
Through two tender offers completed in September 2017 and in February this year, China Development boosted its stake in China Life to 55.95 percent.
The company expects to complete the acquisition of the remaining 44.05 percent in the life insurer, if shareholders approve the deal in a meeting on Oct. 1, it said.
“The takeover, although including the issuance of new shares, would not necessarily weaken our earnings per share, as it would give us full ownership of China Life and allow us to benefit from the insurer’s profit, which should contribute a lot,” China Development spokesman Richard Chang (張立荃) told the Taipei Times by telephone on Friday.
Based on China Life’s closing share price of NT$26.9 and China Development’s share price of NT$13.85 on Thursday, China Development has offered a premium of 17.3 percent for China Life shares, Chang said.
The deal is unusual as China Development would not only immediately offer cash to China Life’s shareholders, but also give them access to its own preferred shares with an annual dividend yield of 3.55 percent, he said.
After fully acquiring China Life, China Development would seek to strengthen its insurance operations, as well as its banking and securities businesses, the company said, adding that it would boost its overall growth.
China Development said that it would intensify efforts to accelerate the integration of its three major businesses — banking, insurance and securities.
Both companies plan to swap shares by the end of this year, pending Financial Supervisory Commission approval, Chang said.
China Life would be delisted from the Taiwan Stock Exchange after the acquisition, Chang said.
Additional reporting by CNA
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