Some Shin Kong Financial Holding Co (新光金控) shareholders appear to be pressing ahead with efforts to veto a merger with Taishin Financial Holding Co (台新金控) at a shareholders’ meeting next month, even after the Financial Supervisory Commission (FSC) on Monday rejected CTBC Financial Holding Co’s (中信金控) bid to acquire Shin Kong Financial.
Shin Kong majority shareholder and former board director Lin Po-han (林伯翰) on Monday urged retail shareholders to remain united and reject the merger at an extraordinary shareholders’ meeting on Oct. 9 to keep Shin Kong Financial alive.
“Let’s stay united and guard our own interests in the absence of CTBC Financial,” Lin said.
Photo: An Rong Xu, Bloomberg
He could find an ally in Shin Kong board director Olivia Wu (吳欣儒), her father, Eugene Wu (吳東進), and others, who have voted against the merger or shown reservations about the deal.
Taishin Financial expressed gratitude to the commission for its decision, while calling on shareholders to support the merger, which it said would benefit the two firms, their employees, customers and shareholders.
Life insurance-oriented Shin Kong Financial also said it respected the commission’s rulings, adding that it has prioritized the company’s sustainable development over other considerations amid merger talks.
CTBC Financial issued a brief statement on Monday, saying that while it regrets the rejection, it respects the FSC’s decision.
But in an exchange filing yesterday, the company said it would submit a revised bid for Shin Kong to its board on Friday.
The commission, which voiced disapproval of CTBC Financial’s acquisition plan, said it would not comment on the merger while it awaits shareholder and regulatory approval.
However, on Monday, FSC Deputy Chairwoman Jean Chiu (邱淑貞) said she did not like Taishin Financial’s plan to issue preferred shares to help fund the merger.
Taishin Financial last week raised its merger offer from NT$11.32 per share to NT$14.18 per share through a share swap ratio of 0.672 Taishin Financial common shares for one Shin Kong Financial common share, and one Taishin Financial preferred share for 0.175 Shin Kong Financial preferred shares.
The preferred shares would receive an annual interest rate of 1.665 percent, in line with three-year time deposits before their buyback three years later, Taishin Financial said.
The preferred shares sound more like “debts” than “equities,” Chiu said, adding that the merger appeared to be based money borrowed from Shin Kong Financial shareholders.
The financial regulator is also concerned about the capital strength of Shin Kong Life Insurance Co (新光人壽), Shin Kong Financial’s main subsidiary, she said.
Taishin Financial has said capital increases should no longer be an issue after the life insurer posted a profit in the second quarter.
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