The Financial Supervisory Commission, which in July eased regulations on mergers and acquisitions (M&As), yesterday said the rules would take effect on Friday, when it starts accepting consolidation applications.
The commission plans to announce the amended Regulations Governing the Investing Activities of a Financial Holding Company (金融控股公司投資管理辦法) today, Banking Bureau Deputy Director Sherri Chuang (莊琇媛) told a news conference in New Taipei City.
The new rules would require buyers in a hostile takeover to purchase a 10 percent stake in the target company to initiate a tender offer, down from the current 25 percent, she said.
Once an application is received, the commission would complete its review within 15 days, Chuang said.
Many buyers are expected to initiate hostile takeovers when the new rules take effect, given that a downturn in local shares have kept valuations favorably low, Taiwan Mergers and Acquisitions and Private Equity Council vice chairman Kevin Lo (駱秉寬) told the Taipei Times on the sidelines of an event in Taipei yesterday.
Listed companies whose major shareholders hold fewer shares than the average, and especially those with ample cash and assets, but low share prices, can easily become the target of hostile takeovers, Lo said, giving as an example Advanced Semiconductor Engineering Inc’s (日月光半導體) bid to acquire Siliconware Precision Industries Co (矽品精密).
“In Asia, few companies can accept being merged, especially through a hostile takeover, as Chinese are afraid of losing face,” Lo said.
However, hostile takeovers have many strong points, including greater control over the purchasing price for the buyer, who would not have to enter negotiations with the target company, Lo said.
Buyers seeking hostile takeovers need to meet four conditions — capital requirements, business performance, overseas expansion capabilities and social responsibility — and buyers that do not meet the criteria can only stage friendly takeovers, the commission said.
A preliminary check revealed that five financial holding companies — CTBC Financial Holding Co (中國信託金控), Fubon Financial Holding Co (富邦金控), Cathay Financial Holding Co (國泰金控), E.Sun Financial Holding Co (玉山金控) and Taishin Financial Holding Co (台新金控) — meet the commission’s requirements, it said.
The commission also named six banks that meet the requirements for hostile takeovers: Chinatrust Commercial Bank (中國信託商銀), Taipei Fubon Commercial Bank (台北富邦銀行), E.Sun Bank (玉山銀行), Taishin International Bank (台新銀行), Shanghai Commercial and Savings Bank Ltd (上海商業儲蓄銀行) and Cathay United Bank (國泰世華銀行).
Meanwhile, the commission has tightened regulations on friendly takeovers.
The buyer would need to have the consent of the target company’s board or reach an agreement that an insider at the target company will sell a more than 25 percent stake to confirm the authenticity of a friendly takeover, the commission said.
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