CTBC Financial Holding Co (中信金控) yesterday said it is seeking regulatory approval to buy Shin Kong Financial Holding Co (新光金控) on the open market, casting a last-minute shadow over Taishin Financial Holding Co’s (台新金控) bid.
CTBC Financial, Taiwan’s third-largest financial conglomerate by assets, made known its intention in a stock exchange filing, just two days before Taishin Financial and Shin Kong Financial were to announce their merger through a share swap scheme.
“We will supply more details over the buyout plan after the Financial Supervisory Commission [FSC] gives the go-ahead,” CTBC Financial said in the filing.
Photo courtesy of CTBC Financial Holding Co
The acquisition attempt, if realized, would enable CTBC Financial to become Taiwan’s largest financial conglomerate, with NT$13.6 billion (US$425.09 billion) in assets, larger than Fubon Financial Holding Co’s (富邦金控) NT$11.8 trillion and Cathay Financial Holding Co’s (國泰金控) NT$13.3 trillion, data from the companies showed.
FSC Deputy Chairman Chen Yen-liang (陳彥良) told reporters later yesterday that financial consolidation deals must be carried out in line with legal requirements without upsetting market order and stability, or diluting shareholders’ rights and interests.
The commission has not yet seen CTBC’s investment documents, Chen said.
Taishin Financial president Welch Lin (林維俊) and Shin Kong Financial president Stephen Chen (陳恩光) on Monday visited the commission in the hope of gaining approval for their deal.
Shin Kong Financial, a laggard among its peers in terms of profitability, has expressed interest in merging with other conglomerates and Taishin Financial was believed to be the most likely buyer given that its chairman, Thomas Wu (吳東亮), is the younger brother of former Shin Kong Financial chairman Eugene Wu (吳東進).
Eugene Wu still retains considerable influence at Shin Kong Financial after losing the chairperson role to other majority shareholders.
The groups would consolidate via a share swap under which one Shin Kong share would be traded for 0.51 to 0.565 of Taishin Financial’s common or special shares, Chinese-language media reported.
Bank-focused Taishin Financial would become Taiwan’s fourth-largest financial service provider if it were to integrate Shin Kong Financial and would substantially enlarge its life insurance business.
CTBC Financial might still beat Taishin Financial by making a more attractive offer that Shin Kong’s board members cannot resist when they meet tomorrow, analysts said.
That helped explain why CTBC Financial yesterday launched an 11th-hour maneuver to win Shin Kong Financial over, analysts said.
“CTBC Financial aims to grow into an international player that will bring more value to the company and Shin Kong Financial, as well as their shareholders,” CTBC Financial said in a statement.
Shares in Shin Kong Financial yesterday closed up 6.31 percent at NT$11.8, beating the financial sector’s 0.19 percent uptick and the TAIEX’s 0.09 percent gain, Taiwan Stock Exchange data showed.
The insurance-oriented conglomerate had been trading for years below its NT$10 issuance price, but staged a 43.55 percent rally in the past six months.
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