CTBC Financial plans tender offer to acquire Shin Kong Financial

Taipei, Aug. 21 (CNA) CTBC Financial Holding Co. said it plans to launch a tender offer to acquire Shin Kong Financial Holding Co. and that the acquisition would create strong synergies and help the company become a regional financial institution.

In a statement, CTBC Financial said the decision to file an application with the Financial Supervisory Commission (FSC) to acquire Shin Kong Financial was made at a board meeting held on Tuesday.

CTBC Financial said Shin Kong Financial would be brought under its corporate umbrella and that the details of the offer, including pricing, would be released if the FSC, the top financial regulator in Taiwan, approves the deal.

In addition to hopes for synergies created by the acquisition, CTBC Financial said it also has faith that the buy-in deal would improve shareholder value for money.

The announcement came before Shin Kong Financial and Taishin Financial Holding Co. were scheduled to hold their board meetings on Thursday, at which they were expecting to discuss the coming together of those two financial firms.

Stephen Chen (陳恩光), president of Shin Kong Financial, and his Taishin Financial counterpart Welch Lin (林維俊) met with Chuang Hsou-yuan (莊琇媛), head of the FSC's Banking Bureau, at the FSC in Taipei on Monday to facilitate the deal.

Therefore, the move by CTBC Financial came as a surprise, as it blocked the potential merger deal between Shin Kong Financial and Taishin Financial.

A market source who asked to remain anonymous explained the deal proposed by CTBC Financial came about after Shin Kong Financial approached the former, paving the way for a possible acquisition.

The source said CTBC Financial had been planning an acquisition to expand its size and strengthen its competitive edge in the financial market for a while.

He added that the offer was not a surprise to him at all.

Meanwhile, rumors of Shin Kong Financial and Taishin Financial merging had been circulating in the market for some time.

Market analysts said foreign institutional investors had started to raise holdings in Shin Kong Financial shares.

This was amplified after speculation on Aug. 16 that the merger would proceed through a stock swap, under which 0.510 Taishin Financial shares would be allocated in exchange for 0.565 Shin Kong Financial shares.

Shin Kong Financial and Taishin Financial have been in talks about merging as early as 2002 but the negotiations fell through. However, speculation about a possible merger continued.

In response, Chen Yen-liang (陳彥良), the FSC vice chairman, said the commission does not comment on any merger or acquisition deal in process but emphasized that any transaction must be legal.

Chen said the FSC will consider whether the deal would destabilize market order and whether shareholders' rights would be protected.

Echoing Chen, Hou Li-yang (侯立洋), chief secretary of the FSC's Banking Bureau, said the commission would look at whether the buyer's capital adequacy ratio met legal demands.

It would also look at whether the buyer could continue smooth operations, extend its reach out of Taiwan and fulfill corporate responsibility.

Hou said the FSC had used the four criteria to issue the green light to a deal for Fubon Financial Holding Co. to acquire Jih Sun Financial Holding Co.

Fubon Financial completed the deal to acquire Jih Sun Financial in April 2023, marking the first acquisition among Taiwan's financial holding firms.

After CTBC Financial proposed a tender offer, Shing Kong Financial shares rose 5.51 percent to close at NT$12.45 (US$0.39) on the Taiwan Stock Exchange on Wednesday. CTBC Financial ended down 3.71 percent at NT$33.70, while Taishin Financial closed up 0.27 percent at NT$18.80.