Taiwan Ratings Corp (中華信評) yesterday revised upward its outlook on Capital Securities Co (群益證券) and EnTie Securities Finance Co (安泰證金) to positive from stable after Capital Securities announced on Monday that it would acquire the firm in a 100 percent share swap transaction.
The outlook revision for Capital Securities reflected the brokerage’s strengthening capitalization if the merger is completed as planned, Taiwan Ratings said in a press statement.
As for EnTie Securities Finance, the outlook revision indicated positive implications for the smaller brokerage’s credit profile after its planned merger with the financially stronger Capital Securities, the local arm of Standard & Poor’s said.
On Monday, Capital Securities said it planned to issue 268.87 million new shares to complete the acquisition, which would increase the firm’s paid-in capitalization to NT$18.79 billion (US$578 million) from NT$16.11 billion as of the end of June.
On Monday, the brokerage said its net worth would rise to NT$21.3 billion from NT$18.1 billion in June.
Capital Securities will be the surviving entity after the merger is completed on March 1.
“The additional capital influx will provide a good buffer to support its business growth amid the competitive operating environment,” Taiwan Ratings said, expecting “limited integration obstacles” in the merger process.
EnTie Securities Finance’s total assets — NT$5.2 billion in June compared with Capital Securities’ NT$37.1 billion — will account for 12.3 percent of the combined entity on a pro forma basis.
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