Yuanta Securities (??j證券), the nation's largest brokerage, has teamed up with Core Pacific Securities (京華證券), the No. 5 broker, according to a joint statement issued by the firms yesterday.
The merger will further solidify Yuanta's position and will likely prompt other securities firms to follow suit, analysts said.
The newly merged company will be named Yuanta Core Pacific Securities (
In Hong Kong, Core Pacific will oversee Core Pacific-Yamaichi International, which will be created from merging Core Pacific Yamaichi with Yuanta's three Hong Kong subsidiaries.
After the merger, Yuanta Core Pacific Securities is expected to command an 8.85 percent of the brokerage market, based on trading volume for October. The combined company will have more than double the market share of No.2 Jihsun Securities (
The new company's capitalization will come in at NT$16.4 billion, with a combined book value of NT$38 billion.
The companies have 88 branches between them islandwide.
Core Pacific Securities will exchange every 1.5 of its shares for one share of Yuanta Securities, according to the firms' statement.
The merger was approved by the board of directors of the two companies on Sunday, the statement said, while shareholders will vote on the merger as soon as possible.
Analysts said talks between Yuanta Securities and other firms have been going on for months.
The fierce competition among more than 200 brokerage houses -- coupled with the fast-growing business of Internet trading -- has reduced profit margins to their thinnest ever.
Most industry executives agreed that massive merger and acquisition activity over the next few years is unavoidable.
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