Cathay makes offer on United World

Cathay Financial Holding Co (國泰金控) made an offer for United World Chinese Commercial Bank (世華銀行), setting the stage for a showdown with rival Fubon Financial Holding Co (富邦金控), which is also seeking to buy Taiwan's tenth-largest lender.

"Cathay submitted a draft proposal which includes an offer and a request to conduct due diligence," United World Executive Vice President Andrew Tsai (蔡清雲) said. The board is yet to agree to let Cathay examine its books, he said.

Cathay's life insurance unit also paid NT$1.27 billion (US$37 million) to lift its stake in United World to 12.26 percent from about 11 percent, Cathay said in a statement.

Cathay, the country's biggest financial company, is vying with second-biggest Fubon for control of the state-backed bank. United World's network of about 80 branches serves middle-class clients across Taiwan. The bank posted net income of NT$5.26 billion last year and has assets of NT$707 billion.

Fubon officials weren't immediately available to comment, while Cathay Financial spokesman Lee Chang-ken (李長庚) declined to discuss the company's takeover plans.

Cathay Life's purchase of shares from San-Ching Engineering Co (三井工程), a fellow member of Taiwan's Lin-Yuan (霖園) group of companies, was "purely an investment," Lee said. "San-Ching may also have capital needs."

Fubon owns about 13 percent of United World, which has said it has also received expressions of interest from state-controlled CTB Financial Holding Co (交銀金控).

The government, which has a 27 percent interest in United World, hasn't said if it will let either Cathay or Fubon raise their stakes.

"From its perspective, the government doesn't want to offend any party by seeming to favor either bidder, so it won't do anything," said Hsiao Cheng-yi, who helps manage about NT$500 million in Taiwan equities at President Investment Trust Corp (統一投信). "I don't believe any party would give way."

"If the parties launch a takeover offer on the market, that would be exciting, though it won't be easy," said Rachel Wu (吳愛顗), a bank analyst at UBS Warburg Securities Ltd in Taipei.

"When it's necessary, the government will assert its influence. As a Taiwanese, I don't think our government wishes to see a hostile takeover."