China Development Financial Holding Co (中華開發金控) yesterday announced plans to acquire between 1.64 billion and 3.27 billion common shares, or between 50.1 percent and 100 percent, of KGI Securities Co (凱基證券) on the open market to enhance its profitability and enhance shareholders’ interests.
Under the deal, each KGI share will be exchanged for 1.2 of China Development Financial’s new common shares and NT$5.5 in cash, China Development Financial said in a filing to the Taiwan Stock Exchange.
The deal is expected to total between NT$27.37 billion and NT$54.63 billion, if it gains approval from shareholders on June 22 and receives the go-ahead from the Financial Supervisory Commission.
China Development Financial, the nation’s worst-performing financial services company in terms of earnings last year, also said yesterday its board approved a proposal to cut the capital of its banking unit by 20.62 percent by canceling 1.6 billion shares.
“The capital reduction aims to boost the return on equity for shareholders and cope with the parent company’s overall capital allocation plan,” China Development Financial said in a filing to the Taiwan Stock Exchange.
After the reduction, China Development Industrial Bank’s (CDIB, 中華開發工銀) capital will decline from the current NT$77.6 billion to NT$61.6 billion.
CDIB’s capital adequacy ratio would stand at 2.17 percent after the reduction, posing no material impact on the bank’s business operations, the filing to the stock exchange said.
Shareholders are scheduled to vote on the capital reduction plan at their annual general meeting on June 22.
The investment banking-centric financial group said in February it posted NT$1.56 million in net profit last year, or earnings per share of NT$0.14, and attributed the poor performance to heavy exposure to technology firms in the solar energy, flat-panel and LED sectors.
Shares of China Development Financial dropped 3.36 percent to NT$8.35 before the capital reduction plan announcement, while the benchmark index fell 1.56 percent.