CTBC Financial Holding Co (中信金控) yesterday officially aborted its bid to acquire Shin Kong Financial Holding Co (新光金控) after the Financial Supervisory Commission made clear its objections to the takeover.
The nation’s third-largest financial conglomerate announced the pullback in a stock exchange filing, nixing a month-long attempt to buy Shin Kong Financial through a public tender offer and share swaps totaling NT$14.55 per share.
The offer is higher than the NT$14.18 per share which Taishin Financial Holding Co (台新金控) proposed in its bid to merge with Shin Kong Financial through full share swaps earlier this month.
Photo: An Rong Xu, Bloomberg
“We have decided to halt investment [in Shin Kong Financial] in line with the Financial Supervisory Commission’s decision on the matter,” the filing said.
FUNDING ISSUES
The commission on Monday said it had reservations about the buyout attempt due to concerns that CTBC Financial intended to buy 51 percent of Shin Kong Financial shares on the open market and via share swaps.
The venture lacked details about how CTBC Financial would secure the necessary funding and what it would do with Shin Kong Financial shares if the buyout failed, the commission said at the time.
CTBC Financial also failed to commit to capital increases for Shin Kong Life Insurance Co (新光人壽) and displayed a lack of understanding about the financial state of the main subsidiary of Shin Kong Financial, the commission said.
The regulator said that companies usually use all-cash advances in hostile takeover bids and set the share purchase target to higher than 80 percent to avoid management rights disputes.
COMMISSION ANGERED
On Tuesday, CTBC Financial responded by indicating that it would call a board meeting later yesterday and revise buyout terms to clarify any misunderstandings.
However, that angered the commission, which on Thursday said that it disliked any moves that would upset or destabilize the financial markets and suggested that CTBC Financial should drop the effort.
CTBC Financial unveiled its investment plan after Taishin Financial and Shin Kong Financial reached a merger agreement after long discussions, the commission said, adding that the Shin Kong Financial share price has been volatile recently.
The two conglomerates would call shareholder meetings on Oct. 9 to vote on the merger and then seek regulatory approval from the commission.
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