Takeover of Taiwan International fails

China Development Financial Corp's (中華開發金控) hostile bid for Taiwan International Securities Corp (金鼎證券) failed yesterday after the brokerage's management team won a majority of board seats in a general meeting.

Taiwan International Securities secured five out of the nine board seats and one of the two supervisor spots, while China Development Financial took the remainder in the brokerage's general meeting, which stretched to nearly seven hours.

The financial holding firm, however, voiced its unhappiness with the proceedings as soon as the votes were announced and asked that the ballots and attendance records be preserved, citing flaws in the voting process.

"We want to express our objection to the voting results, as the voting process violated the principle of fairness," said Lawrence Liu (劉紹樑), chief strategy officer at China Development Financial.

Liu and Sherie Chiu (邱德馨), China Development Financial's chief financial officer, then stormed out of the venue without making any further comment.

Chang Ping-chao (張平沼), chairman of Taiwan International Group, and his wife Chen Shu-chu (陳淑珠), chairwoman of Taiwan International Securities, however, looked relaxed as they left the meeting with their control over the management secure.

The power struggle between the two rivals drew a record high attendance at the brokerage's shareholders meeting, 98.7 percent, setting a new mark for the nation's listed companies.

Late yesterday China Development Financial said it was not sure what it would seek to do with yesterday's ballots and attendance records. But one choice could be to seek a recount of the ballots, it said.

Meanwhile, it claims to hold 41.08 percent of Taiwan International Securities' shares.

"We will continue to buy the brokerage's shares at reasonable prices in the future," Liu said during the general meeting.

China Development Financial might seek to expand its holdings to more than 51 percent, he said.

Promoting a three-in-one merger among the financial holding firm's brokerage arm, Grand Cathay Securities Corp (大華證券), Taiwan International Securities, and KGI Securities Co (中信證券), would depend on future cooperation of the two camps, Liu said.

KGI Securities is controlled by Angelo Koo (辜仲瑩), president of China Development Financial.

Taiwan International Securities said yesterday's results conformed to expectations and that it would seek talks on collaborating with China Development Financial.

To counter China Development Financial's hostile bid, Taiwan International Securities acquired two smaller rivals in February, First Securities Co (第一證券) and Far Eastern Securities Co (遠東證券). It also engaged Legacy Partners Group as a strategic foreign investor. It said yesterday that it would give one board seat to the US firm.