Shares of Ruentex Industries Ltd (潤泰全) and Ruentex Development Co (潤泰新) plunged more than 6 percent yesterday on concern they may have violated rules on disclosure relating to the purchase of American International Group Inc’s local unit, Nan Shan Life Insurance Co (南山人壽).
Ruentex Industries and Ruentex Development hold 23 percent and 25 percent respectively of the newly created consortium Ruen Chen Investment Holding Co (潤成投資), which won the Nan Shan bid.
The shares of textile maker Ruentex Industries and land developer Ruentex Development — members of the Ruentex Group (潤泰集團) — fell 6.14 percent and 6.07 percent to NT$74.90 and NT$48 respectively after the Financial Supervisory Commission said on Thursday it could launch a probe, if necessary, into reports of irregularities involving group chairman Samuel Yin (尹衍樑).
The benchmark TAIEX dropped by a mere 0.03 percent yesterday.
Allegations of disclosure violations prompted institutional investors to cut their holdings of Ruentex Industries and Ruentex Development, said Winson Wang (王榮旭), an analyst at Marbo Securities Consultant Co (萬寶證券投顧).
“The selling pressure may spread to individual investors next week if the uncertainty lingers,” Wang said by telephone.
Yin told the Chinese-language weekly Business Today (今周刊) that AIG had picked Ruen Chen on Dec. 22 during an exclusive interview on Tuesday, a day before AIG’s scheduled announcement on Wednesday.
The Chinese-language Economic Daily News said Yin had made similar remarks during the news conference on Wednesday.
Ruen Chen inked an agreement with AIG on Wednesday to buy AIG’s 97.57 percent stake in Nan Shan for US$2.16 billion in cash. Ruen Chen is 80 percent owned by the Ruentex Group, with the remaining 20 percent held by Pou Chen Corp (寶成工業), a local footwear maker.
The reports prompted concern that Yin’s remarks might have violated disclosure rules.
Ruentex Industries and Ruentex Development dismissed the reports as inaccurate in separate filings to the Taiwan Stock Exchange yesterday.
Lee Chi-hsien (李啟賢), director-general of Securities and Futures Bureau, said the bureau needed more time to find out if Yin had indeed violated disclosure rules.
“The two companies have failed to benefit from the acquisition deal due to an expected lengthy review that may cast doubt on their valuation,” Wang said. “Personally I believe the group is well equipped financially.”
Compared with their share prices on Dec. 22, when Ruentex Industries closed at NT$90.60, while Ruentex Development closed at NT$54 — both higher than their closing prices yesterday — Wang said it didn’t seem to be a case of insider trading.
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