Taiwan Life Insurance Co (台灣人壽保險) shareholders yesterday voted to scrap a planned merger with CTBC Financial Holding Co (中信金控).
CTBC Financial said in a stock exchange filing that it respects the life insurer’s decision, which should come as little surprise after moves by Long Bon International Co (龍邦), Taiwan Life’s biggest shareholder, over the past three months to block the deal valued at about NT$26.6 billion (US$884.87 million) via a share-swap scheme.
The 67-year-old insurer’s shareholders overturned a board decision in April to extend the deadline to decide on a merger from April 30 to June 30 and put an end to all consolidation moves.
After winning majority control of the insurer’s 10-seat board in the morning, Long Bon, a Greater Taichung-based developer and hotelier, initiated two unscheduled motions to quash the deal that would allow each Taiwan Life share to be exchanged for 1.44 shares of CTBC Financial.
The reversal sailed through the annual shareholders’ meeting despite protests by state-owned Bank of Taiwan (台灣銀行), which issued a lengthy statement early in the morning to support the merger and questioned Taiwan Life’s stance on the merger.
Taiwan Life initiated the merger last year, saying the business environment has grown increasingly difficult for insurers without the support of banks and other financial affiliates to boost cross-selling efficiency, the Bank of Taiwan said in a statement.
Taiwan Life first struck a merger agreement with CTBC Financial in October last year and the two sides called separate shareholders’ meetings to approve the deal in December.
“Taiwan Life has yet to give a reasonable account today for the turnabout that is hurting the company’s creditability, image and share price,” the statement said.
Taiwan Life shares closed down 3.46 percent at NT$20.90 yesterday, underperforming the TAIEX, which edged up 0.07 percent, Taiwan Stock Exchange data showed.
The stock has slumped 21.43 percent over the past three months, compared with a 3.5 percent gain for financial and insurance plays and a 5.93 percent rally for the benchmark index.
Taiwan Life has since mid-April made known its intention to back off from the merger, saying the Financial Supervisory Commission’s punishment of CTBC over an investment violation merited reconsideration.
However, the one-year investment ban does not extend to existing acquisition cases.
Taiwan Life is reportedly unhappy about the “rough treatment” exhibited by CTBC Financial during consolidation talks.
Local media said a suitor from Macau later entered the scene, with a much more generous offer if the insurer remains available.
Taiwan Life yesterday said it aims to strengthen organic growth and narrow negative interest spreads from legacy policies.
The insurer elected former Chinese Nationalist Party (KMT) legislator Hsu Shu-po (許舒博) to replace Chu Ping-yu (朱炳昱) as chairman.