Jih Sun Financial Holding Co (日盛金控) has suggested that its shareholders reconsider selling their shares to Fubon Financial Holding Co (富邦金控), saying that Fubon’s offer of NT$13 per share is too low.
The company’s response to a tender offer begun last month by Fubon Financial emerged in a regulatory filing late on Tuesday, which said that its larger rival’s offer represented a premium of just 4.9 percent over Jih Sun’s net asset value per share of NT$12.39 at the end of September last year.
Although Fubon said in its tender offer prospectus that it took “control premiums” into account when setting the price, it did not consider synergy in the acquisition and thus underestimated the Taipei-based company’s value, Jih Sun said in the filing.
Photo: Lam Yik Fei, Bloomberg
Control premium is the amount that a buyer is willing to pay over the current market price of a publicly traded company to acquire a controlling share in the company.
Jih Sun has assigned A-Plus CPA Firm (明喆聯合會計師事務所) and KW CPAs Firm (高威聯合會計師事務所) to act as independent experts and review whether Fubon’s bid is reasonable, it said, adding that the accounting firms concluded their reviews on Monday.
In calculating Jih Sun’s fair value, A-Plus CPA estimated that each common stock is worth NT$13.89 to NT$15.71 — higher than Fubon’s bid price, Jih Sun said.
Using other valuation approaches — such as market approach, market price method and asset approach — the accounting firms estimated a reasonable bid price to range from NT$9.63 to NT$16.93, Jih Sun said.
As the independent experts considered Fubon’s bid unreasonable, Jih Sun’s board members recommended that shareholders carefully consider whether to sell their shares to Fubon, it said.
Besides the low bid price, Fubon Financial did not lay out how it would take care of Jih Sun’s employees, it said, adding that if Fubon terminated some of Jih Sun’s operations and dismissed employees, many households would be affected.
Jih Sun did not have the opportunity to negotiate with Fubon before the tender offer was announced, because it is a hostile takeover, so Jih Sun is uncertain how the acquisition would affect its business, customer relations and staff, it said.
The filing came after Jih Sun’s board convened a meeting on Tuesday attended by all eight directors and three independent directors.
Fubon Financial, which began the public tender offer on Dec. 22, said that the acquisition would create a win-win situation for Jih Sun’s shareholders, customers and employees, and urged the shareholders to sell.
Its bid price represented a premium of 24.8 percent over Jih Sun’s average closing price over the 20 trading days before Dec. 18, Fubon Financial said, adding that the premium is similar to other public tender offers conducted in Taiwan.
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