Shares in Taiwan Life Insurance Co (台灣人壽) closed down by the daily limit yesterday ahead of a board meeting to discuss its agreement to merge with CTBC Financial Holding Co (中信金控).
The insurer, which agreed in October last year to be bought by CTBC Financial through a share swap, is considering retreating from the deal in favor of a more generous suitor, once the agreement’s deadline expires on Sunday.
Long Bon International Co (龍邦), a Greater Taichung-based hotel service provider and the largest shareholder in Taiwan Life, is unwilling to renew its contract and has briefed the Financial Supervisory Commission (FSC) on its position.
FSC Chairman William Tseng (曾銘宗) yesterday told the legislature’s Finance Committee that the commission has stopped its review until all parties involved settle their differences.
“It takes bilateral consent to make a happy marriage, but it does not seem so in this case, especially on the part of Taiwan Life,” Tseng said.
Shares in Taiwan Life fell 6.86 percent to close at NT$24.45 yesterday, while Long Bon stock ended down 3.05 percent to NT$20.65, Taiwan Stock Exchange data showed.
CTBC shares fared better, creeping up 0.78 percent to NT$19.45.
Taiwan Life said in a stock filing that it would call a board meeting as soon as possible on whether to extend the buyout contract.
The insurer’s flip-flop reportedly has to do with Hong Kong businesswoman Maisy Ho (何超蕸), a daughter of billionaire Macau casino owner Stanley Ho (何鴻燊).
Maisy Ho has offered to buy a majority stake in Long Bon with a hefty premium through a financial firm, enabling her to reject the buyout agreement, local Chinese-language media reports said.
The agreement allows room for renegotiation in the case of a major change in bilateral capital structure, the reports said, without citing sources.
CTBC Financial insisted in a statement that the contract should remain valid even after Sunday’s expiration date unless the parties suggest an end in writing.
“So far, we have not received any termination notice,” CTBC Financial said.
CTBC Financial protested the depiction of the buyout plan as a hostile takeover and called on regulators to speed up review of the deal — to which shareholders for both firms have consented, the statement said.
The commission placed an investment ban on CTBC Financial last month after ruling that it hid an investment in China from its board of directors and regulators. The commission agreed this week to make an exception with the purchases of Japanese bank Tokyo Star and Taiwan Life, on grounds a delay may incur huge compensations.
State-owned Taiwan Financial Holding Co (台灣金控), which controls four seats on Taiwan Life’s 10-member board, is inclined to extend the deal till July 30, but would give Long Bon a chance to state its opinions, company chairwoman Lee Jih-chu (李紀珠) said.
“It is better for the acquisition to proceed, as transaction terms and external conditions remain unchanged,” Lee said.
Long Bon has to explain why it previously preferred to limit its role to capital investment in Taiwan Life and now thinks otherwise, she said.
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