Taishin Financial Holding Co (台新金控) yesterday said that it is exploring merger and acquisition opportunities as part of its strategy to have multiple growth engines in the banking, brokerage and insurance sectors.
The company made the statement after reports it is mulling its brokerage unit acquiring Ta Chong Securities Co Ltd (大眾證券) in a deal worth NT$4.2 billion (US$136 million).
“I cannot comment on specific cases,” Taishin chief financial officer and spokesperson Welch Lin (林維俊) said at an investors’ conference in Taipei.
However, he said that while the nation’s brokerages have been hard hit by waning turnover on the local bourse in the past two years, the downturn has created an opportunity for expansion.
“Valuations are more favorable during downturns and the company would have to pay a much higher price during boom times,” Lin said.
Taishin and Ta Chong Securities have been in talks with regulators about the rumored buyout, before Taishin is due to hold an extraordinary meeting of its board of directors on Friday, the Chinese-language Economic Daily News and Commercial Times reported on Monday.
The acquisition would rely on the consent of Yuanta Financial Holding Co (元大金控), which owns about a 35 percent stake in Ta Chong Securities through its acquisition of Ta Chong Bank Ltd (大眾銀行) last year.
Taishin’s reputed offer of NT$11 per share is lower than the Ta Chong Securities’ estimated book value of NT$12.4 per share and its translates to a modest 10 percent premium, industry observers were quoted as saying.
In addition, the offer was made last year when average daily turnover on the local bourse had tumbled to between NT$40 billion and NT$50 billion, before rebounding to NT$113.01 billion as of Feb. 14, up from NT$70 billion at the end of January, Financial Supervisory Commission data showed.
Meanwhile, Lin said that the company would not be able to increase its capital before a court decision regarding a decade-long management dispute with state-run Chang Hwa Bank (CHB, 彰化銀行).
Should the court side with CHB, Taishin would be flush with cash after it liquidates its 22.2 percent stake in the state-run bank, Lin said.
Should the court rule in Taishin’s favor, the company would require considerable funds to fully acquire and merge its banking arm with CHB, Lin said, adding that the proceedings have accelerated and a ruling could be issued in June ahead of CHB’s annual shareholders’ meeting.
Taishin posted net income of NT$11.4 billion last year, or earnings per share of NT$1.14, down 13.8 percent year-on-year.
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