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Cathay plunges the limit after investors snub deal

The TAIEX fell for the first day in three, led by Cathay Financial Holding Co (國泰金控) after the nation's biggest financial company paid a premium to take over United World Chinese Commercial Bank (世華商銀).

The TAIEX dropped 34.14, or 0.7 percent, to 4,817.93 as more than two stocks fell for every one that rose. Shares worth NT$45.23 billion (US$1.34 billion) changed hands, the third-lowest this year.

Cathay Financial plunged 6.8 percent, its daily limit, to NT$46.50. Cathay agreed to buy United World, the nation's 10th largest lender by assets, for NT$114.6 billion.

That's about NT$30.38 for each United World share, a 21 percent premium on the lender's closing price of NT$25.20 yesterday.

"For Cathay shareholders, it's not a great deal; the price is too high," said Simon Chao, who manages NT$800 million in stocks at President Investment Trust Corp (統一投信).

Quanta Computer Inc (廣達電腦) rose 1.3 percent to NT$76 on local Chinese-language reports that the notebook-computer maker received orders from Hewlett-Packard Co for computers for consumer and business use.

MediaTek Inc (聯發科技) fell NT$2, or 0.5 percent, to NT$424 on reports that the chip designer said third-quarter sales may fall from the second quarter because of slowing computer demand.

Prime Optical Fiber Corp (坦聯) fell NT$0.10, or 0.8 percent, to NT$12.25. The optical fiber maker dumped its profit forecast for the year for a NT$142.2 million loss, citing a worsening communications market.
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