The crisis-laden buyout of Taiwan Life Insurance Co (台灣人壽) by CTBC Financial Holding Co (中信金控) is now up to the Financial Supervisory Commission after the insurer agreed late on Friday night to press ahead with the deal.
The commission has paused a review after Taiwan Life expressed a desire to exit the merger agreement, which was due to expire yesterday.
Taiwan Life’s 10-member board voted 6-4 at 10:30pm on Friday to extend the agreement to June 30, allowing major shareholders to participate in CTBC dividend distributions in July or August, independent director and Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Wu Chung-shu (吳中書) said yesterday.
The twist came after a marathon meeting during which Taiwan Life chairman Chu Ping-yu (朱炳昱) was absent for several hours while staying in telephone contact with CTBC Financial and Long Bon International Co (龍邦), the insurer’s largest shareholder, which made clear its intention to go separate ways.
“A reversal would violate the principle of trust in the absence of compelling reasons,” Wu said, adding that Chu appreciated the seriousness of the issue, but had to oppose the deal to side with Long Bon.
The Greater Taichung-based hotel service provider was reportedly offered a 30 percent premium for its majority stake by Hong Kong businesswoman Maisy Ho (何超蕸), who is reportedly eyeing China’s insurance market. Taiwan Life’s joint venture King Dragon Life (君龍人壽) in Xiamen, Fujian Province could be seen as a launch pad.
Chu mentioned no third party, but voiced concerns over the rights of Taiwan Life employees, Wu said.
While CTBC Financial has pledged to retain all Taiwan Life employees and keep them on their current salaries for two years, many have expressed concerns about severance later, Wu said. He declined to comment on Taiwan Life’s reported request for a seat in CTBC board.
However, CTBC Financial Holding Co president Daniel Wu (吳一揆) said on Saturday that the company would not consider the matter until a year after the integration.
The issues would not harm synergy benefits linked to the merger and can be resolved with better communication, Wu Chung-shu said, adding that other directors, including Chu, share that view.
Taiwan Life, which relies heavily on traditional sales agents, has hit a snag growing its profitability in recent years, as the local market matures, he said.
CTBC Bank (中信銀行) and CTBC Life Insurance Co (中信人壽) would help end the stalemate given their vibrant bank insurance and telemarketing businesses, he said.
“The ball is back in the commission’s court again, and a delayed approval poses the biggest threat to the deal,” Wu said.
The commission’s investment ban on CTBC Financial last month spurred Taiwan Life Insurance to question the wisdom of the merger, he quoted Chu as saying.