Banking academy seminar backs merger activities

More local enterprises should pursue mergers and acquisitions to increase their competitiveness, pundits said yesterday at a seminar.

"Even hostile takeovers can help increase corporate competitiveness and regenerate management efficiency," said Du Ying-tzyong (杜英宗), chairman of Salomon Smith Barney in Taiwan.

Du made the comments at a seminar organized by the Taiwan Academy of Banking and Finance (TABF, 台灣金融研訓院) to discuss the country's financial reform and industrial restructuring.

TABF president Chi Schive (薛琦), who hosted yesterday's discussions, said that "hostile takeovers can actually result in favorable corporate turnover," since competition will bring in both external and internal growth for corporations seeking an optimum economy of scale.

Lawrence Liu (劉邵樑), an attorney with Lee & Li (理律法律), said in his keynote speech that "M&As offer domestic companies opportunities to closely cooperate with foreign multinationals."

Liu assisted the government din rawing up amendments to M&A-related laws, such as the Company Law (公司法), the Securities Exchange Law (證券交易法), the Fair Trade Law (公平交易法), the Company Merger Law (企業併購法) and the Financial Holding Company Law (金融控股公司法).

Liu said that the prompt passage of amendments would provide a legal footing to entice corporate consolidation efforts through mergers, but added that the government should make adjustments to its regulatory models to avoid bureaucratic manipulation.

Du said that the government should encourage cross-border management and relax restrictions on foreign investment in Taiwan, which he said should be seen as an endorsement to Taiwanese markets.

Lee Jie-haun (李志宏), a professor of finance at National Chengchi University, however, urged caution, saying that "unsuccessful risk management could bring about negative returns on equities."

He said that post-merger risks, such as interpersonal, cultural and managerial conflicts, could negatively impact industrial and financial progress.

Franny Yeh (葉秀惠), vice president of Fubon Securities Corp's (富邦證券) investment banking division, and Chen Hsuan-bin (陳炫彬), president of AU Optronics Corp (友達光電), presented examples of successful local mergers. "Post-merger synergy is the key to the success of mergers and acquisitions," Chen said.

Fubon Securities partnered with the Citibank NA to establish the Fubon Financial Holding Co (富邦金控) last December, while the 7,300-employee AU Optronics was formed following the merger between Acer Display Technologies Inc (達科) and Unipac Optoelectronics Corp (聯友光電) last September.