The Financial Supervisory Commission (FSC) yesterday rejected CTBC Financial Holding Co’s (中信金控) bid to acquire Shin Kong Financial Holding Co (新光金控) through a public tender offer and share swap, saying the proposal lacked details and certainty that it would guarantee the interests of shareholders and the financial market’s stability.
The commission made clear its dislike for hostile takeover moves using share swaps because such arrangements would pose volatility to the firms’ share prices.
“CTBC Financial failed to put forth a sound plan to minimize predictable uncertainties,” FSC Deputy Chairwoman Jean Chiu (邱淑貞) told a news conference yesterday evening.
Photo: Wu Hsin-tian, Taipei Times
CTBC Financial last month proposed buying 51 percent of Shin Kong Financial shares on the open market and via a share swap scheme, a day after Taishin Financial Holding Co (台新金控) and Shin Kong Financial made a joint announcement about a merger through full share swap arrangements.
CTBC Financial also failed to address how it would fund the public tender offer or how it would handle Shin Kong Financial shares if the buyout falls through, Chiu said.
In addition, CTBC Financial failed to commit to capital increases for Shin Kong Financial’s life insurance arm, she said.
Financial conglomerates have a large market capitalization and should approach mergers and acquisitions with professional judgment and in a respectful manner, Chiu said, adding that CTBC Financial demonstrated a lack of understanding about Shin Kong Life Insurance Co’s (新光人壽) financial health. Cash-strained Shin Kong Life is the flagship unit of Shin Kong Financial.
Of the 195 mergers and acquisitions since 2002, only six attempts carried through using share swaps, Chiu said.
The commission has never approved the use of share swaps to purchase banks or life insurance companies because such schemes create volatility in mutual share prices and the financial market, she said.
The case is different for merger attempts because they should have won approval from bilateral board directors and attained the go-ahead from respective shareholders, she said.
CTBC Financial unveiled its buyout plan after board directors at Taishin Financial and Shin Kong Financial reached a merger agreement and discussed the matter for a long time, the commission said.
The commission said it is disappointed about the ongoing verbal attacks between CTBC Financial and Taishin Financial.
However, the commission said it does not favor merger bids over hostile takeover attempts, rather it assigns great importance to cash when reviewing hostile takeover bids.
In the past, tender bid initiators largely set their buyout target at 80 percent to diminish management right disputes and ensure smooth operations, Chiu said.
Taishin Financial and Shin Kong Financial next have to remove resistance from their shareholders before they put their case to regulatory review, the commission said.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai
RSS