Chinatrust clinches acquisition of Grand Commercial Bank

Chinatrust Financial Holding Co (中信金控), owner of Taiwan's largest credit-card issuer, yesterday beat out SinoPac Holdings (建華金控) to acquire smaller rival Grand Commercial Bank (萬通銀行) for about NT$20.3 billion ($588 million) in cash and shares as it seeks to expand.

Chinatrust will pay NT$12.65 a share for half of Grand Commercial, controlled by Taiwan's largest food company, and pay the other half in its own shares, Chinatrust president Luo Lian-fu (羅聯福) said at the companies' joint press announcement. That's a 22.8 percent premium over the stock's closing price of NT$10.30.

The share swap is tentatively scheduled to take effect by Dec. 31 and these two lenders will respectively hold temporary shareholders meetings on Aug. 20 to approve the merger deal.

SinoPac Holdings, which has the second-highest percentage of overseas shareholders among Taiwan lenders, last month said it's bidding for Grand Commercial.

Chinatrust is seeking to expand to compete with Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控) which both announced takeovers last August. Chinatrust lost out as Cathay bought United World Chinese Commercial Bank (世華銀行) and Fubon acquired TaipeiBank (台北銀行).

"The takeover can help Chinatrust almost double its branch network, which is crucial for boosting its retail banking products," said Rayson Heung, a banking analyst at HSBC Securities Asia Ltd.

Grand Commercial, a lender 35-percent-controlled by the Uni-President Group (統一集團), Taiwan's largest food company, is seeking merger and acquisition partners to boost its size and competitiveness, senior executive vice president Steven Lin (林蒼生) said in May.

Grand Commercial, which has 44 branches in Taiwan, is attractive because of its network of automated teller machines in 7-Eleven shops, run by President Chain Store Corp (統一超商).

Taishin Financial Holding Co (台新銀行) and Far Eastern International Bank (遠東銀行) had been invited by Grand Commercial for merger discussions, a Chinese-language newspaper reported earlier, citing no one. Lin said ABN Amro NV had also held takeover talks.