The Financial Supervisory Commission yesterday approved plans by China Development Financial Holding Co (中華開發金控) to buy all KGI Securities Co (凱基證券) shares on the open market.
Earlier this month, China Development Financial said that it planned to buy KGI Securities at a generous premium and that it would integrate the business with its subsidiary Grand Cathay Securities Corp (大華證券).
The buyout plan, the largest involving a local brokerage at NT$54.63 billion (US$1.85 billion), involves a share swap scheme, under which each KGI share may be exchanged for 1.2 China Development Financial common shares, in addition to NT$5.5 in cash.
China Development Financial, also the owner of China Development Industrial Bank (中華開發工銀), will have a share capital of NT$155.4 billion upon completion of the acquisition and a securities unit with 112 outlets nationwide, the commission said.
To fund the integration, the banking subsidiary will cut its capital by 20.62 percent by canceling 1.6 billion shares, lowering its capital adequacy ratio to 21.17 percent, still way higher than the required 8 percent.
The acquisition would place the buyer first in the underwriting business and second in brokerage services.
Separately, Chinatrust Financial Holding Co (中信金控), yesterday said its banking unit, Chinatrust Commercial Bank (中國信託商銀), had signed a memorandum of understanding with China UnionPay Co (中國銀聯), to jointly develop credit cards, online payments and cross-border remittance business across the Taiwan Strait.