Taiwan International Securities Corp's (
The brokerage's sudden and controversial announcement was seen as a move to counter a hostile takeover attempt by bigger rival China Development Financial Holding Co (
"Our board decided on Feb. 24 to cease the merger with Far East Securities (
A move by Far East's shareholders to transfer ownership of shares to another party makes it incapable of fulfilling a promise to support future board candidates nominated by Taiwan International, violating the merger agreement, the brokerage said.
The decision to halt the merger was legitimate and legal, because the merger contract -- which had been approved by the shareholders -- entitled the board to pull out of the agreement if certain deal-breaking conditions emerged, Taiwan International said.
The company's merger with First Securities Co (
Taiwan International made the explanation after the Financial Supervisory Commission said the brokerage had not gained its approval to call off the merger.
The regulator said it will closely monitor any possible infringement of shareholders' rights.
The financial watchdog will summon Taiwan International to elaborate on the decision today.
In late August last year, Taiwan International began to push for a merger with three smaller rivals to counter what it said was a hostile takeover bid by China Development Financial, the nation's 13th largest financial group.
China Development Financial undermined the company's efforts by acquiring significant shareholdings in Global Securities Finance Corp (
China Development Financial, which owns 36.44 percent of Taiwan International, slammed the decision to stop the deal in a statement released late on Monday.
As a major shareholder, China Development Financial may demand that Taiwan
International's board take responsibility for any damage to shareholders, it
China Development Financial is to wrap up its tender offer for Taiwan
International this afternoon, hoping to buy as many as 133 million shares at
NT$14 apiece for about NT$1.86 billion.