SinoPac gets intent letter on merger from Taishin

SinoPac Financial Holdings Co (建華金控), the nation's 10th-biggest lender, said it received a letter of intent from Taishin Financial Holding Co (台新金控) about a possible merger, SinoPac said in an e-mailed statement.

The letter indicates "Taishin's ongoing interest in conducting merger negotiations with SinoPac," according to an e-mailed statement issued by SinoPac Chairman Richard Hong (洪敏弘) to shareholders today.

Hong said that on April 12 he sent letters to Taishin and International Bank of Taipei (台北商銀) asking both to submit merger proposals by yesterday. The proposals will be discussed by the new board which is elected at our May 10 shareholder meeting, he said at the time.

Financial regulators offering the nation's 49 banks and 14 financial holding companies, which service a population of 23 million people, incentives to merge such as easier approvals to introduce financial products.

"I don't know [if] there's a deadline for the merger plan," said Eugene Huang (黃世祿), executive vice president of International Bank of Taipei, in a telephone interview. "There is no doubt we remain interested in merging with SinoPac."

Taishin offered to pay NT$23.50 a share or a 35 percent premium then to buy SinoPac, Hong said on April 1. Taishin said on March 28 that talks to buy SinoPac had collapsed because its rival wants to merge with International Bank of Taipei. But Hong said on April 1 that the talks with Taishin did not collapse, stressing that shareholders might discuss the proposals thoroughly next month.

Taishin's offer, equivalent to about US$2.9 billion, would consist of as much as 40 percent in cash with the remainder to be paid in shares, according to Hong.

SinoPac is also in merger talks with International Bank of Taipei, which is yet to provide an offer in writing, but has discussed offering 1 of its shares for 1.25 to 1.3 SinoPac shares, Hong said earlier this month.

SinoPac has a market value of NT$67.8 billion, more than half the size of Taishin's NT$123.4 billion. International Bank of Taipei has a market value of NT$48.2 billion.

A merger with International Bank would create the nation's ninth-largest financial holding company by market capitalization with 3.4 percent of the loan market, while a merger with Taishin would create the fifth largest with 4.8 percent market share, Hong said previously.