Standard Chartered Bank said yesterday that it had gained a majority stake in a Taiwanese lender, after the British bank announced its purchase plans three weeks ago.
In a statement released yesterday, Standard Chartered said it has received tenders for more than 51 percent of the issued share capital of Hsinchu International Bank (新竹國際商銀), the nation's seventh-largest private bank by loans.
"This is a milestone in the tender offer," the London-based bank said in the statement.
On Sept. 29, Standard Chartered said it would buy between a 51 percent and 100 percent holding in Hsinchu International at NT$24.5 per share through a recommended tender offer. Shares of Hsinchu International closed at NT$24.3 on the Taiwan Stock Exchange on Friday.
Based on its offer of NT$24.5 per share for Hsinchu International bank, the British buyer is paying a premium of 40 percent to Hsinchu International's closing share price of NT$17.45 on Sept. 28. The purchase totaled NT$40.5 billion (US$1.22 billion), which is more than twice the local lender's net asset value.
The tender, the first outright acquisition of a Taiwanese bank by an international bank, is due to close on Oct. 31.
"Achieving 51 percent acceptance, well before the close of the tender offer, demonstrates widespread shareholder support. This acquisition is an outstanding opportunity to build scale in Taiwan, which is the fourth-largest banking market in Asia," Mervyn Davies, chief executive of Standard Chartered Group, said in the statement.
Hsinchu International, which runs 83 branches nationwide with a 1 percent share of the local banking market, reported a pre-tax deficit of NT$2.13 billion, or a loss of NT$1.31 per share, in the first eight months of the year.
Including Hsinchu International's local network, the number of Standard Chartered's local outlets will increase to 86. The British bank expects the acquisition to become earnings accretive with a double-digit return on investment in 2008.
"Hsinchu [International] is a well managed bank with a strong presence in the wealthiest regions of Taiwan and over 2.5 million customer accounts. Together with Hsinchu we will be strongly positioned to capitalize on trade and investment flows between Taiwan and the rest of the Asia, particularly China," Kai Nargolwala, executive director of Standard Chartered Group, said in the statement.
Standard Chartered said it plans by late next year to combine its Taiwanese operations with Hsinchu International, which has a long and established operating history of over 50 years in Taipei, Taoyuan and Hsinchu.
The British bank also aims to delist Hsinchu International from the Taiwan Stock Exchange, subject to regulatory consent and Hsinchu International's approval. But Nargolwala said the bank has no intention of laying off any Hsinchu International staff as a result of the acquisition.
Meanwhile, the nation's financial regulator and judicial investigators are probing alleged insider trading of Hsinchu International shares prior to Standard Chartered's announcement of its acquisition bid on Sept. 29.
According to the Financial Supervisory Commission's data, shares of Hsinchu International rose 38.7 percent to NT$18.65 between Aug. 31 and Sept. 29, and the volume of allegedly abnormal trading totaled up to 40 million shares, with a value of about NT$400 million. But neither the commission nor prosecutors have specified the targeted party in the investigation.