The board of Chinatrust Financial Holding Co (中信金控) yesterday approved a proposal to acquire a 30 percent stake in Nan Shan Life Insurance Co (南山人壽) from China Strategic Holdings Ltd (中策集團) for US$660 million, after the Hong Kong-based company, in a consortium with Primus Financial Holdings Ltd, completes its ownership transfer of the Taipei life insurer.
Chinatrust Financial yesterday signed a memorandum of understanding (MOU) with China Strategic over the deal. It expects to close the stake acquisition in the second quarter of next year after the consortium receives regulatory approval to take up a 97.57 percent stake in Nan Shan from financially distressed American International Group Inc (AIG), its press statement said.
In accordance with the MOU, Chinatrust Financial plans to later raise NT$44.35 billion (US$1.38 billion) via private placement by issuing 2.5 billion new common shares, with China Strategic buying 1.172 billion shares for approximately NT$20.8 billion, or NT$17.74 per share.
After the share dilution, China Strategic will hold a 9.95 percent stake in Chinatrust Financial, the statement said.
Within the next three years after the MOU takes effect, the two parties can engage in negotiations should China Strategic express an interest in increasing its stake in Chinatrust Financial or should Chinatrust be interested in raising its holding in Nan Shan, it said.
Chinatrust Financial said it expects its partnership with China Strategic will create a synergy to help expand Nan Shan Life’s business scope and its sales outlets.
Dexter Hsu (許世德), an analyst at JPMorgan, lauded the partnership as a “win-win” deal.
He said that Chinatrust, which was the highest bidder in Nan Shan’s auction last month with an offer of about NT$80 billion, would be buying Nan Shan at a discount of about 15 percent.
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