Taiwan’s CTBC Financial Holding has made a bold move amid the battle to acquire Shin Kong Financial, offering NT$131.4bn (US$4bn) for a majority stake in the hopes of creating the country’s biggest financial conglomerate.
Shin Kong is one of the leading financial firms in Taiwan, with a primary focus on life insurance, with subsidiaries which include Shin Kong Life (SKL) and Shin Kong Property Insurance Agency (SKIA).
On August 23, CTBC offered to acquire Shin Kong through a cash and share swap deal valued at a total of NT$14.55 per share.
The said offer has a 17.1% premium above Taishin Financial Holding Co.’s offer of NT$11.32 per share, as per Bloomberg.
President and spokesperson Rachael Kao of CTBC disclosed that the financial group intends to acquire a 51% share in the life insurance-focused company with the goal of controlling the boardroom and guaranteeing the company’s smooth operation, as per the Taipei Times.
Kao added that the attempt to acquire Shin Kong would involve NT$4.09 per share under the cash and share swap scheme. With this, each Shin Kong share would be equivalent to 0.3132 CTBC shares. It also suggests that CTBC would spend NT$131.4bn to achieve a majority stake in Shin Kong Financial.
She explained that the buyout would “enable CTBC to grow into the largest local financial conglomerate by assets and a serious player in the region.”
If CTBC, Taiwan’s fifth-largest life insurer via its subsidiary Taiwan Life, merges with Shin Kong, the country’s sixth-largest life insurer, the resulting conglomerate would rank just behind Cathay Life Insurance, the country’s industry leader. According to Bloomberg Law, the conglomerate would also pose a “threat” to other life insurance firms in the country.
This announcement comes just a day after Shin Kong and Taishin’s joint announcement of a merger via a share swap deal.
CTBC first showed its interest in taking over Shin Kong on Tuesday, August 20, when it announced its plans to submit a tender offer for the latter.
Kao revealed that CTBC would submit its acquisition documents this week and would push through with the buyout on the open market when the Financial Supervisory Commission gives its approval.
Meanwhile, Shin Kong is scheduled to hold a shareholders’ meeting to vote on the matter. However, it remains to be seen whether CTBC can attend the said meeting to veto the deal with Taishin. Due to current regulations, CTBC needs to own Shin Kong shares before September 10 to participate in the meeting; however, it cannot purchase these shares until receiving approval from the FSC, which may cause them to miss the deadline.
