Taishin Financial raises offer in merger with Shin Kong Financial

Taipei, Sept. 11 (CNA) Taishin Financial Holding Co. announced Wednesday that it has raised the price it is offering to take over Shin Kong Financial Holding Co. in a merger deal, amid competition from CTBC Financial Holding Co., which is also seeking to acquire the company.

A Taishin Financial special board meeting held Wednesday afternoon approved a proposal to raise the stock swap ratio to 0.672 Taishin Financial common shares for each Shin Kong Financial common share, up from the previous ratio of 0.6022 set on Aug. 22.

In addition, Taishin Financial will also exchange 0.175 preferred shares for one Shin Kong Financial preferred share to sweeten the deal.

The new stock swap ratio translates into an acquisition price of NT$14.18 (US$0.44) per share based on the closing prices of the two companies on Wednesday, up about 25 percent from the previous swap ratio based on the closing prices on Aug. 22.

Taishin Financial said the increased acquisition price represents a 5 percent premium over Shin Kong Financial's closing price of NT$13.50 on Wednesday.

Shin Kong Financial also held a special board meeting Wednesday and approved the raised stock swap ratio.

Taishin Financial had said it would considering raising the stock swap ratio after CTBC Financial proposed a tender offer on Aug. 23 to acquire a 51 percent stake in Shin Kong Financial for NT$14.55 per share in an initial phase based on CTBC Financial's Aug. 23 closing price, before taking Shin Kong Financial completely under its corporate umbrella.

The tender offer to obtain one share of Shin Kong Financial's common stock is a combination of NT$4.09 in cash and a 0.3132 share of CTBC Financial's common stock.

Both Taishin Financial and CTBC Financial have sought approval from the Fair Trade Commission (FTC) for their combination deals. The FTC has said it will review the applications separately.

Financial Supervisory Commission (FSC) Vice Chairman Chen Chih-min (陳志民) said on Sept. 4 that both cases are a horizontal combination, so the commission will consider several major aspects, including market concentration, possible collusion in pricing, and the potential of synergies to provide better services to clients.

A horizontal combination is the merger or acquisition of companies in the same industry at the same stage of production or distribution.

Taishin Financial and Shin Kong Financial have scheduled their own special general meetings for Oct. 9 to secure approval from shareholders for the merger plan before seeking a nod from the FSC, the top financial regulator in Taiwan.

CTBC Financial has filed an application with the FSC. The commission said it expects to make public its position on the case by Sept. 24 after asking the company to submit more information about the deal.

According to CTBC Financial, an acquisition of Shin Kong Financial would boost its assets to NT$13.5 trillion, up from roughly NT$8.37 trillion. It would also become the largest financial holding firm in Taiwan.

On the other hand, merging with Shin Kong Financial would raise the assets of Taishin Financial to almost NT$8.29 trillion and it would become the fourth largest financial holding firm in Taiwan.