Taishin accuses CTBC of disrupting market in Shin Kong takeover bid

Taipei, Sept. 13 (CNA) Taishin Financial Holding Co. on Friday accused its competitor CTBC Financial Holding Co. of disrupting market order in its bid to take over Shin Kong Financial Holding Co.

CTBC Financial on Thursday disclosed the price in the second phase of its takeover bid, without the required approval from the Financial Supervisory Commission (FSC), according to a statement released by Taishin Financial.

That move by CTBC Financial has disrupted order in the financial market, Taishin Financial said, calling on the FSC to launch an investigation into the matter to protect investors' interests.

The disruption is likely to hurt the rights of Shin Kong Financial shareholders and adversely affect the development of Taiwan's financial market, the statement said.

The two companies have been engaged in a contentious bid to take over Shin Kong Financial, with Taishin Financial aiming for a merger and CTBC Financial making bids for an acquisition.

Taishin Financial has painted CTBC Financial's latest tender offer as an attempt at a hostile takeover aimed at derailing the merger.

The boards of Shin Kong Financial and Taishin Financial have already approved the merger, the latter said.

On Thursday, CTBC Financial said it was offering the same amount as in its tender offer to acquire up to a 51 percent stake in Shin Kong Financial in the initial stage of a takeover, and it would buy the remaining shares in the second phase.

According to a statement issued by CTBC Financial on Aug. 23, its tender offer to acquire up to a 51 percent stake in Shin Kong Financial was a combination of NT$4.09 (US$0.13) per share in cash and a 0.3132 share of CTBC Financial's common stock for one Shin Kong Financial common share.

CTBC Financial's acquisition price beat Taishin Financial's stock swap offer on Aug. 22, which was 0.6022 Taishin Financial common shares for each Shin Kong Financial common share.

On Wednesday, Taishin Financial raised its acquisition price by 25 percent in a higher stock swap ratio, offering a 0.672 common share, plus a 0.175 preferred share in exchange for one Shin Kong Financial common share.

That was equivalent to about NT$14.18, based on Taishin Financial's closing price that day, and was closer to the NT$14.2 offered by CTBC Financial, based on its closing price that day.

Taishin Financial said the hike in the stock swap ratio was aimed at gaining more support from its shareholders.

Among its 15 board members, 11 voted for the new price, and two vote against it. The other two expressed reservations about the new offer, saying that they were against the preferred shares and were more in favor of offering cash to Shin Kong Financial's shareholders.

According to Taishin Financial, it will buy back the preferred shares of Shing Kong Financial shareholders three years after the issuance, while paying them an annual interest rate of 1.665 percent during the three-year period.

Taishin Financial has said it will list the preferred shares on the market so Shin Kong Financial shareholders will be able to sell them on the open market, even before the three-year maturity.

In Friday's statement, Taishin Financial said its planned merger with Shin Kong Financial will be conducted transparently, referring to the uncertainty over the acquisition price in the second phase of CTBC Financial's takeover offer.

In response, CTBC Financial released its second phase acquisition price, and blasted Tasishin Financial for labeling its tender offer as a hostile takeover, saying it was a free capital market in Taiwan.

CTBC Financial said it was more profitable than Taishin Financial, citing its earnings per share for the first half of this year, which were NT$2.67, well above Taishin Financial's NT$1.08.

In addition, CTBC Financial said, its return on equity was 18.4 percent, also higher than Taishin Financial's 12 percent.

Taishin Financial and CTBC Financial have each submitted applications to the Fair Trade Commission for approval of the Shin Kong Financial acquisition.

CTBC Financial has also applied for approval from the FSC , which is expected to give a response by Sept. 24.

Meanwhile, Taishin Financial and Shin Kong Financial will each hold special general meetings on Oct. 9 on the merger plan, before seeking FSC approval, they said.

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, making it the largest financial holding firm in Taiwan.

A merger with Shin Kong Financial and Taishin Financial would raise the latter's assets to almost NT$8.29 trillion, making it the fourth largest financial holding company in Taiwan.