Taishin Financial Holding Co (台新金控) yesterday secured a merger agreement with Shin Kong Financial Holding Co (新光金控) via share swaps, despite lingering uncertainty over a hostile takeover bid by CTBC Financial Holding Co (中信金控) on the open market.
Bank-focused Taishin Financial and life insurance-focused Shin Kong Financial announced the agreement, although it still needs Financial Supervisory Commission (FSC) approval and a green light at their respective shareholders’ meetings, while CTBC could press ahead with the buyout attempt.
“The consolidation would be carried out fully via share swaps and would benefit both Taishin and Shin Kong,” Taishin Financial chief financial officer Carol Lai (賴昭吟) said at a news conference at the Taiwan Stock Exchange in Taipei last night.
Photo: Wu Hsin-tien, Taipei Times
Taishin Financial plans to issue new ordinary shares for Shin Kong Financial shares, with a share swap ratio of 0.6022 Taishin Financial common shares for one Shin Kong Financial common share, while one Taishin Financial preferred share for each Shin Kong Financial preferred share, Lai said.
The companies would put the proposal to their shareholders on Oct. 9 and then set a date for the merger after receiving regulatory approval, she said.
The two conglomerates have little overlapping businesses and the merger would make the combined entity Taiwan’s fourth-largest financial service provider based on assets, Lai said.
After the merger, Shin Kong Financial will become part of Taishin Financial, though the new entity will be renamed Taishin-Shin Kong Financial Holding Co (台新新光金控).
Shin Kong Financial, a laggard among its peers in terms of profitability, has expressed interest in merging with other conglomerates, and Taishin Financial was believed to be the most likely buyer, given that its chairman, Thomas Wu (吳東亮), is the younger brother of former Shin Kong Financial chairman Eugene Wu (吳東進).
Taishin Financial has pledged to retain all Shin Kong employees after the merger, which it said would bolster their mutual banking, life insurance and securities businesses.
CTBC Financial, which has deeper pockets, on Tuesday said that it aims to grow into a large international player as it plans to launch a tender offer to acquire Shin Kong Financial on the open market.
The company would become Taiwan’s largest financial service provider if it were to acquire Shin Kong Financial, it said.
The FSC has sought to stay neutral by repeating that all acquisition deals must be conducted in compliance with legal requirements without harming market order or stability, and do not compromise the interests and rights of shareholders.
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