TAIWAN’S CTBC Financial Holding upped the ante in the battle for Shin Kong Financial Holding, offering more than US$4 billion for a controlling stake in its rival to create the island’s biggest finance group.
CTBC offered NT$14.55 in cash and stock for up to 51 per cent in Shin Kong, Taiwan’s fifth-largest financial conglomerate, according to a briefing on Friday (Aug 23). That’s a 17 per cent premium on Shin Kong’s last closing price. The bid trumps an offer from rival suitor Taishin Financial Holding, which proposed a stock swap for Shin Kong worth NT$11.32 a share.
The latest offer caps a dramatic week for Taiwanese banks as local authorities try to bolster the island’s finance industry and diversify the economy away from its tech-heavy concentration. Any deal for Shin Kong would be the first financial holding transaction in Taiwan since Fubon Financial Holding acquired Jih Sun Financial Holdings in 2022.
Under the CTBC offer, Shin Kong investors would get 0.3132 of a CTBC share plus NT$4.09 cash for each stock they own. The offer means CTBC would spend NT$131.4 billion (S$5.4 billion) for Shin Kong’s 51 per cent stake, CTBC president Rachael Kao said on Friday.
The bid from CTBC comes just three days after its board approved a tender offer for Shin Kong to form Taiwan’s largest financial holding company by assets. CTBC did not unveil its offer details until Friday, a day after Taishin and Shin Kong announced their own proposed merger.
Shin Kong will vote on the Taishin deal at an Oct 9 shareholders’ meeting though it’s not clear if CTBC can attend to veto Taishin’s bid. Under current regulations, CTBC will have to own Shin Kong shares before Sep 10 to join the meeting. However, the bank will not be able to buy shares until the Financial Supervisory Commission gives its approval, which could come past the deadline.
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Takeover talk surrounding Shin Kong, whose businesses span across insurance, brokerage and underwriting, has heated up in recent years as it struggled to weather a series of crises.
In 2020, Shin Kong’s chairman Wu Tung-chin was suspended from his role at the life insurance business for poor internal controls that led to a NT$27.6 million fine for the unit. He continued to intervene in the firm’s operations, prompting another fine in 2022 and a regulatory call for its management team to operate independently.
Shin Kong swung to a profit of NT$3.11 billion in the first quarter from a loss a year earlier, though its life unit still struggled. CTBC’s net income jumped 61 per cent from a year earlier to NT$20.9 billion for the period, while Taishin’s first-quarter income slipped 1 per cent to NT$5 billion.
Taiwan’s financial holding companies are mostly dominated by the island’s rich families, with Fubon and Cathay Financial Holding controlled by the Tsai family, and Shin Kong and Taishin founded by the Wu family. CTBC is owned by the Koo family.
The Koo family started their business empire during the Japanese colonial period in Taiwan and made its fortune from dealing in goods such as salt and sugar, before expanding into property and finance.
The conglomerate is now run by the fourth generation, with Jeffrey Koo Jr controlling the CTBC Group, and his two brothers owning KGI Financial Holding and Chailease Holding respectively. BLOOMBERG
