The nation's crowded banking sector is likely to undergo a shake-up after Taishin Financial Holding Co outbid six competitors yesterday to buy a controlling 22-percent stake in state-run Chang Hwa Commercial Bank for NT$36.6 billion (US$1.14 billion), or NT$26.12 per share.
Taishin's offer of NT$26.12 per share is equivalent to a premium of more than 45 percent over Chang Hwa's floor price of NT$17.89 per share and a premium of more than 200 percent over the bank's net value of NT$12.31 per share.
The bid made Taishin Financial the single-largest shareholder in Chang Hwa, the nation's sixth-largest lender. Taishin could now become the nation's second-largest financial service provider, after Cathay Financial Holding, with total assets worth NT$2.1 trillion after it formally takes over Chang Hwa.
The deal means Taishin International Bank will have the largest number of branches of any financial institution in the country -- 270 -- and it will become the second-biggest bank with assets of over NT$2 trillion, next to the wholly state-owned Bank of Taiwan.
"The is a triple-win deal for Taishin Financial, Chang Hwa and the government," Taishin Financial's chairman Thomas Wu (吳東亮) told a press conference yesterday.
Taishin Financial, now Chang Hwa's largest single private shareholder, can form a strategic alliance or merger with the bank, which in return is getting the capital it needs to clear its bad assets, Wu said. The deal is also a milestone for the government's financial reform and privatization efforts, he said.
Backed by the Ministry of Finance, Taishin will gain two seats on Chang Hwa's 14-seat board for the moment, before it secures a majority in the official board reshuffle following the closure of the deal at the end of September, Taishin said.
Refuting concerns that Taishin overbid, Wu said his company enjoyed a 1.8-percent dividend on the 1.4 billion new preferred shares it had bought, and that the deal will bring merger benefits in the long term.
However, he said Taishin might not buy the finance ministry's remaining 18 percent stake in Chang Hwa if the price is too high and might instead seek to buy more shares in the market to strengthen its control.
Chang Hwa's spokesman Hsieh Chao-nan (謝昭南) said the company was satisfied with Taishin's offer. Taishin beat six other bidders at yesterday's auction, including Singapore's state-owned Temasek Holdings and Fubon Financial Holding Co, Hsieh said.
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