CTBC Financial Holding Co (中信金控) yesterday offered to acquire Shin Kong Financial Holding Co (新光金控) via a cash and share swap deal totaling NT$14.55 per share, saying it would prove a better choice for the life insurance-focused conglomerate, its employees and shareholders.
The offer would suggest a 28.5 percent premium over NT$11.32 per share the other contender, Taishin Financial Holding Co (台新金控), unveiled a day earlier.
CTBC president and spokeswoman Rachael Kao (高麗雪) said the group aims to buy 51 percent of Shin Kong for NT$131.4 billion (US$4.11 billion) so that it would dominate the boardroom and ensure the smooth running of the firm.
Photo: CNA
The buyout attempt would feature NT$4.09 per share in cash and a share swap scheme under which one Shin Kong share would exchange for 0.3132 CTBC shares, Kao said.
That would translate into NT$14.55 per share based on CTBC’s three-day average closing price of NT$33.4, she said.
“The acquisition would enable CTBC to grow into the largest local financial conglomerate by assets and a serious player in the region,” Kao said.
CTBC has demonstrated its ability and competence in integrating other firms as evidenced by its life insurance subsidiary Taiwan Life Insurance Co (台灣人壽), she said.
Taiwan Life has consistently turned profit one year after joining CTBC Financial, she added.
Shin Kong Financial, while a laggard in profitability among its peers, is a worthy investment target given its life insurance, banking and securities presences, Kao said.
It also makes more sense for a company with bigger assets to acquire a smaller one, rather than the other way around, she said, adding that CTBC ranks No. 3 with NT$8.38 trillion of assets, ahead of Shin Kong’s NT$5.08 trillion assets in fifth place.
Taishin Financial has NT$3.2 trillion of assets in 13th place.
CTBC would submit acquisition documents early next week and would carry out the buyout on the open market after the Financial Supervisory Commission (FSC) gives the go-ahead, Kao said.
Kao declined to comment on the time frame of the deal or title of the consolidated entity, saying they are minor concerns compared with legal compliance, financial market stability and the interests of shareholders.
CTBC also refused to promise that it would retain all Shin Kong employees, saying it is more important to enhance the profitability of Shin Kong so its employees would enjoy better pay.
The FSC and Shin Kong shareholders have the final say on the matter.
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