Yuanta Financial Holding Co (元大金控) is to acquire 100 percent of Ta Chong Bank Ltd (TC Bank, 大眾銀行) through a cash-and-share swap deal worth about NT$56.55 billion (US$1.7 billion), the two companies said yesterday.
The two companies’ boards approved the deal, which stipulates that Yuanta Financial is to pay NT$8.15 per share in cash and an amount of newly issued common shares in exchange for each Ta Chong share.
In addition, Yuanta Financial is to purchase NT$14.5 billion in European Convertible Bonds issued by Ta Chong, in which Washington-based private-equity firm Carlyle Group LP is a major stakeholder.
Overall, the deal values Ta Chong shares at NT$16.3 each, or 35 percent above the stock’s closing price of NT$12 yesterday.
Yuanta Financial shares slid 2.52 percent to NT$13.55 in Taipei trading yesterday.
“The deal represents the reaching of a significant milestone in our efforts toward a transition from a securities brokerage-centric business to a more diversified operation where growth is augmented by banking and insurance,” Yuanta financial spokesperson Vincent Chen (陳修偉) said at a press conference.
“While we excel at corporate banking, the addition of TC Bank will bolster our presence in the retail banking sector,” Chen said, adding that combined, the two companies are likely to establish good coverage across central and southern Taiwan.
Total assets of Yuanta Commercial Bank (元大銀行), the banking unit of Yuanta Financial, reach about NT$800 billion and Ta Chong’s figures stand at approximately NT$450 billion.
After the merger, the banks’ combined total assets would be NT$1.25 trillion, with combined deposits estimated at NT$1 trillion.
The combined entity is to have 155 banking branches in Taiwan, after Yuanta Bank’s 88 branches concentrated in central Taiwan are bolstered by Ta Chong’s 67 branches across southern Taiwan. The number of combined active credit cards is expected to reach 500,000.
Following the merger, the new entity is estimated to rank seventh in scale among domestic peers, Yuanta Financial said, adding that it has agreed to protect Ta Chong employees for 36 months following the conclusion of the deal.
The deal, subject to approval by regulatory authorities, is expected to be completed in February next year, it said.
The sale is expected to allow Carlyle to exit its investment in Ta Chong, which reported net income declines in two of the past three calendar years. The US firm and a partner invested NT$21.5 billion in the Taiwanese lender in 2007.
Additional reporting by Bloomberg
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