CTBC Financial files application to buy Shin Kong Financial

Taipei, Aug. 27 (CNA) CTBC Financial Holding Co. filed an application with the Financial Supervisory Commission (FSC) on Monday for approval to acquire Shin Kong Financial Holding Co. as its hostile takeover bid continues.

The FSC, Taiwan's top financial regulator, confirmed later the same day that it had received the CTBC Financial application to acquire Shin Kong Financial, which has already agreed with Taishin Financial Holding Co. on a merger pending shareholder approval.

Under CTBC Financial's takeover plan, the company would spend NT$131.4 billion (US$4.13 billion) to buy a 51 percent stake in Shin Kong Financial within 50 days after the tender offer kicks off, and then completely bring it under CTBC Financial's corporate umbrella.

That would translate to an offer of NT$14.55 per share to acquire Shin Kong Financial, topping the NT$11.32 per share proposed by Taishin Financial on Thursday and approved by the board of Shin Kong Financial.

According to the Financial Holding Company Act, the FSC has 15 business days to decide whether to approve a tender offer application, and if it does not respond to the application, it will automatically obtain approval.

In other words, the FSC has to express its stance on the tender offer by Sept. 16.

The boards of both Taishin Financial and Shin Kong Financial agreed to the two companies' merger plan on Aug. 22 and scheduled their own special shareholder meetings for Oct. 9 to seek shareholder approval for the plan.

Taishin Financial will also need approval from the FSC and the Fair Trade Commission for its acquisition plan.

If the merger were to proceed, the new company, to be called Taishin-Shin Kong Financial Co., would become the fourth largest financial holding firm in Taiwan after CTCB Financial.

CTBC Financial seems intent, however, on supplanting Taishin Financial in acquiring Shin Kong Financial.

In a statement issued Monday, CTBC Financial said Taiwan's financial sector is suffering from intense competition in an overcrowded market, resulting in a lack of competitiveness among local financial institutions.

The acquisition would help CTBC Financial leap ahead of regional rivals such as Standard Chartered Bank (Hong Kong), Nomura Holdings of Japan and United Overseas Bank (Singapore) in terms of assets, helping it build a more solid footing in the regional and even world market, it said.

It would also become the largest financial holding firm in Taiwan with assets of NT$13.5 trillion, up from the current about NT$8.37 trillion, CTBC said.

Local media reported Tuesday that CTBC Financial has obtained support for its bid from steel maker Prosperity Tieh Enterprise Co., which owns a 5 percent stake in Shin Kong Financial, and other steel firms that hold a roughly 3 percent stake in the company.