Two rival takeover bids for Shin Kong Financial Holding Co capped a dramatic week for Taiwanese financial institutions last week and raised eyebrows among all parties involved. The company is facing two possibilities: a friendly merger of two companies to create a new entity through an offer by Taishin Financial Holding Co, or a hostile takeover bid by CTBC Financial Holding Co, which is attempting to gain control of Shin Kong Financial by going directly to the company’s shareholders rather than its management.
On Thursday night, Taishin Financial announced its offer: It would issue new shares and swap 0.6022 of its common shares for each Shin Kong Financial common share, in addition to a 1:1 swap ratio for their preferred shares. Taishin Financial’s bid came after CTBC Financial on Tuesday last week announced its tender offer for Shin Kong Financial. On Friday, CTBC Financial unveiled the terms of its deal: It offers NT$4.09 per share in cash and would swap 0.3132 of its shares for each Shin Kong Financial share.
Any deal for Shin Kong Financial — whose businesses cover insurance, banking, brokerage, investment trust and venture capital — would be the first financial holding company merger in the nation since Fubon Financial Holding Co’s acquisition of Jih Sun Financial Holdings Co in late 2022. The scale of financial holding companies has doubled in the past 10 years and their impact on the financial market has grown significantly following several major mergers and acquisitions (M&A) over the years.
Speculation about new financial M&As has been going around since the start of this year, including King’s Town Bank’s potential search for a buyer and Shin Kong Financial’s renewed merger talks with Taishin Financial after years of on-and-off negotiations. However, whether a deal is successfully concluded depends on the target company’s shareholders and, ultimately, the Financial Supervisory Commission (FSC).
In June, FSC Chairman Peng Jin-lung (彭金隆) said he would support any merger of financial holding companies as long as it helps enhance their competitiveness, complies with regulations, protects shareholders’ rights and ensures market stability. However, an M&A involving state-run financial holding firms is less likely in the near term, as they typically face significant challenges, including potential political hurdles and labor resistance. Privately run financial conglomerates face less opposition.
Taishin Financial and Shin Kong Financial expect to submit their respective proposals to their shareholders on Oct. 9 and then set a date for the merger after receiving regulatory approval. CTBC Financial plans to submit its tender offer for review by the commission this week before initiating moves to purchase up to 51 percent of Shin Kong Financial shares on the open market. The FSC’s role is to ensure fair and equitable treatment by providing a level playing field for the two rivals in this race.
The commission must ensure that Taishin Financial and Shin Kong Financial can successfully convene their respective extraordinary shareholders’ meetings on Oct. 9 to discuss the merger deal, and that CTBC Financial can smoothly launch a tender offer for Shin Kong Financial. The commission must thoroughly review the qualifications of Taishin Financial and CTBC Financial, including their financial viability and capital adequacy, as well as their post-merger plans for clients, depositors, policyholders and employees. Moreover, the commission must stay alert to any unusual movements from people seeking to profit from news about the M&A to safeguard market order and protect the interests of stakeholders.
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