China Development Financial Holding Corp (CDFHC, 中華開發金控) plans to delay its acquisition of China Life Insurance Co (中國人壽), as the insurer’s shareholders might be hesitant to sell their holdings at a lower price, it said yesterday.
China Life’s share price tumbled 26 percent to NT$25.9 yesterday, compared with NT$35 in September 2017, when CDFHC acquired 25 percent of the outstanding shares of the company, Taiwan Stock Exchange data showed.
In 2017, the financial holding company, which owns a 35 percent stake in China Life, promised the Financial Supervisory Commission (FSC) it would fully acquire the insurance company within two-and-half years, which would be in March this year, corporate data showed.
Although the company said it hopes the FSC would grant it a grace period for the full acquisition, the regulator yesterday said that it has not yet received an application to do so.
“Our acquisition cost could be reduced if we are to acquire China Life now, thanks to the company’s lower share price,” CDFHC spokesman Richard Chang (張立筌) told the Taipei Times by telephone.
“However, we decided to delay doing that, as we expect China Life’s retail shareholders might not be interested in selling stocks to us at NT$25 now,” Chang said.
Even though China Life’s board of directors would approve the acquisition, the insurer’s retail investors play a key role in the success of the deal, Chang said, adding that the right timing to proceed might be when its share price rebounds, which would be difficult to predict.
Weak confidence in the life insurance business in recent years attributed to the decline, he said.
China Life was the engine that fueled CDFHC’s profit growth last year, Chang said. It posted 34 percent annual growth in net profit to NT$13.59 billion (US$453.6 million) last year, company data showed.
CDFHC has no plan to launch fundraising projects this year, which would mean issuing new common shares, as it aims to maintain higher earnings per share, Chang said.
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