China Development Financial Holding Corp (
China Development shares closed down 1.64 percent at NT$12, while Far Eastern shares gained 5.23 percent at NT$5.03 on the Taiwan Stock Exchange yesterday.
"The [US] AIG Group approached us and asked about our intention to take over their holdings in Far Eastern," Civi Tsai (
But this was not a done deal and internal evaluation was continuing, she said.
Tsai made the remarks after local media reported yesterday that China Development could spend NT$500 million (US$14.9 million) to acquire AIG's 18 percent stake in Far Eastern on top of the financial holding firm's 13 percent stake in the air carrier.
AIG reportedly planned to dump its holding on concern that Far Eastern's business could be weighed down by the nation's high speed rail service which could start operating next October.
However, China Development's plan to buy a bigger stake "is made on the basis of the anticipated business boom that would result from the possible opening-up of cross-strait direct links," Tsai said.
China Development, an investment and industrial banking group, comprises China Development Industrial Bank (
The financial conglomerate is also eager to expand its brokerage business by taking over smaller rival Taiwan International Securities Corp (金鼎證券), after its planned trilateral merger with Grand Cathay, KGI Securities Co (中信證券) and President Securities Corp (統一證券) collapsed in April.
By last Thursday, China Development had increased its stake in Taiwan International Securities to 31.16 percent, according to the company's filing on Monday.
"It is not a good deal, as Taiwan International Securities is a money-losing company," said Chu Yu-chun (
Taiwan International Securities could suffer more losses, as its wholly owned subsidiary Taiwan International Futures Corp (金鼎期貨) has been ordered by financial regulators to suspend business for six months after an employee defrauded clients of more than NT$2 billion through unauthorized trading.
China Development's superintendent also demanded at a board of directors' meeting last week that the company review the planned acquisition of Taiwan International Securities.
The proposed deal is expected to eat into China Development's profits this year, Chu said. She forecast earnings of between NT$5 billion and NT$6 billion, or NT$0.50 and NT$0.60 per share, for the company this year.
The analyst was conservative on China Development's long-term prospects. Expecting further weakening profitability next year, Chu has trimmed the company's 12-month target price to NT$16.
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