First Financial Holding Co (
The amount, which Mitsui Sumitomo agreed to pay for all of Mingtai's 220 million shares at NT$38.182 per share, is three times as much as the Taiwanese insurer's book value of NT$2.7 billion as of December, First Financial said in a statement.
Following the disposal of non-core assets, "we will be focusing on our core banking business as well as other relevant investment-trust and securities businesses," First Financial's acting chairman Chao Yuan-chi (
First Financial acquired Mingtai through issuance of new shares worth NT$7.6 billion in 2003. The company could reap profits of around NT$800 million after obtaining approval from its shareholders on June 10 and later from the nation's Investment Commission, according to the company.
When asked how it plans to utilize the proceeds, First Financial's vice president Huang Hsien-chuan (黃獻全) said it could be used to expand the capital of its banking unit, but shied away from commenting on using the proceeds on a possible merger-and-acquisition (M&A) deal.
"It depends on how the chances for an M&A look in the future," Huang said.
Mingtai generated after-tax profits of around NT$250 million on revenue of NT$2.4 billion last year.
Citigroup advised First Financial on the sale.
"It is a good deal ... as First Financial gained NT$8.4 billion in cash while keeping the cross-selling benefit," said Du Ying-tzung (
Financial holding companies should focus on their core competence and profitability, Du said, adding that the profitability of property insurance is unstable owing to the unpredictable nature of calamities.
First Financial should place its emphasis on consumer and corporate banking, as well as wealth management, for future development, he said.
First Financial is the nation's first financial holding company to sell off its assets, which sparked speculation that the company is paving the way for a merger.
"This is very positive news for First Financial," said Mike Shiao (蕭光一), a fund manager at Invesco Taiwan Ltd (景順投信). "The Taiwan government is getting serious about consolidating the financial industry and this will spark more mergers."
President Chen Shui-bian (陳水扁) vowed last year to push forward the consolidation of the nation's crowded finance sector by halving the number of state-run banks to six by the end of this year and reducing the number of financial holding firms to seven from the current 14 by the end of next year.
The acquisition will also help increase Mitsui Sumitomo's revenue from its Asian business outside Japan by 50 percent to ?108 billion (US$1.02 billion), the Japanese insurer said in a separate statement.
"Taiwan's general insurance market is similar to that of Japan," said Takaaki Yamaguchi, a Mitsui Sumitomo spokesman in Tokyo. "Deregulation of the market is expected in 2008 and we can adapt our knowledge and technology to the region."
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure