Yuanta Financial Holding Co (元大金控), owner of the nation’s biggest securities brokerage, announced yesterday it had reached an agreement on a NT$48.9 billion (US$1.69 billion) merger with Polaris Securities Co (寶來證券), a move that will further solidify its position in the industry at home and enhance its competitive edge in overseas markets.
The announcement came after Polaris received a letter of interest from China Development Financial Holding Corp (中華開發金控) on March 28 and a competing bid from Yuanta on March 30.
In their separate stock exchange filings, the two companies said their boards agreed to the merger, which will allow Polaris shareholders to swap each of their shares for 0.5 shares in Yuanta Financial plus a cash offer of NT$12.2 per share, with Yuanta Securities Co (元大證券) to be the surviving entity.
Shares of Yuanta Financial ended at NT$21.4 on Friday. The deal would represent a premium of 11.17 percent on Polaris’ closing price of NT$20.6 on Friday. Polaris will be delisted from the Taiwan Stock Exchange when the merger is completed in November.
As Polaris has 2.139 billion outstanding shares, it is estimated that Yuanta Financial will pay NT$48.9 billion to complete the deal.
“Following the merger, Yuanta expects to retain its leading position in the securities brokerage market. At the same time, Yuanta also seeks to secure an advantage in investment trust and futures businesses,” the company said.
Yuanta chairman Yen Ching-chang (顏慶章) said yesterday at a press conference that the new securities brokerage, Yuanta Polaris Securities Co (元大寶來證券), would command a market share of 15.72 percent in Taiwan, with a network of 187 outlets.
Yuanta Securities currently leads the market with a share of 11.37 percent, while Polaris has a 4.35 percent share, Yen said.
Besides the securities brokerage business, the merged entity would also enjoy a combined market share of above 25 percent in margin trading and a 17.38 percent share in futures brokerage, Yuanta said.
Both companies said they would present the merger to shareholders at their annual general meetings on June 28 and expect to complete the deal on Nov. 1. The deal is still subject to regulatory approval.
Integration of the two firms’ investment trust, futures and other businesses will be carried out in the second phase, Yen said. They will be under the name of Yuanta Polaris for three years, he said.
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