Capital Securities Corp (群益證券) yesterday announced the acquisition of EnTie Securities Finance Co (安泰證金) through a share swap.
In a stock exchange filing issued yesterday, Capital Securities, which already has a 6.16 percent stake in EnTie, said its board had approved a proposal to issue 268.87 million new shares to complete the acquisition.
Under the terms of the share swap, shareholders in EnTie Securities Finance will receive one Capital Securities share for every 1.4086 shares they currently hold.
The merger is expected to be completed on March 1.
Although billed as a merger of equals, Capital Securities will be the surviving company, while EnTie Securities Finance will be dissolved to boost Capital Securities’ capital adequacy ratio and enhance its competitive edge, the company said.
“The [proposed] acquisition is expected to reinforce the company’s working capital and improve its capital structure, as well as reduce its interest expense to increase profitability,” Capital Securities said in the filing.
The company hopes that through the merger, it could see its net value expand and accordingly “raise its legal investment ceiling for better allocation of corporate resources worldwide,” the filing said.
As of the end of June, Capital Securities had paid-in capitalization of NT$16.11 billion (US$493 million), with a net value of NT$18.11 billion, or NT$11.24 per share.
The unlisted EnTie Securities Finance, founded in 1995, had a paid-in capitalization of NT$5.37 billion at the end of last year, with a net value per share of NT$7.55. EnTie in April announced plans to reduce capitalization by 24.79 percent to NT$4.04 billion.
After the merger, Capital Securities expects to see interest spending cut by NT$20 million annually, while raising its investment ceiling by NT$1 billion, with NT$900 million earmarked for overseas investment, the brokerage said in a separate statement.
Shares of Capital Securities dropped 3.06 percent to NT$15.85 yesterday before the company’s acquisition announcement. The merger, if it proceeds smoothly, will be the second brokerage merger in the last six months after KGI Securities Co (凱基證券) bought Taishin Securities Co (台証證券) for NT$29 billion in May.
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