SHARES of Taiwan’s CTBC Financial Holding gained and Shin Kong Financial Holding’s fell after a bid to create the island’s biggest financial group was blocked.
CTBC’s shares rose 2.8 per cent in Taipei on Wednesday (Sep 18), while Shin Kong’s shares tumbled 7.9 per cent. The moves came after the local regulator late on Monday rejected CTBC’s US$4.1 billion takeover bid for Shin Kong and trading in Taiwan was closed on Tuesday for a holiday, making Wednesday’s session the opportunity for local traders to react to the decision.
“The market had thought CTBC’s bid for Shin Kong was too high and if the merger actually materialises, it could affect CTBC’s asset quality for the next few years,” said Adam Lin, an analyst at More Rich Investment Advisory. “Hence, the failure of the merger would be positive to share prices.”
Shin Kong shares have gained more than 10 per cent since news of a potential merger emerged last month. The stock price, however, has yet to reach CTBC’s tender offer of NT$14.55 per share. Analysts attribute that partly to Shin Kong’s uneven financial performance and to trouble at its insurance arm. While the company swung to a first-half profit from a loss a year ago, it posted a net monthly loss again in August.
CTBC said it would submit a revised bid for Shin Kong to its board, according to an exchange filing late on Tuesday. Going by “the regulator’s previous stance, it’s unlikely that the new proposal will be approved,” Lin said.
Meanwhile, shares of Taishin Financial Holding, which has been in a bidding war with CTBC to take over Shin Kong, fell 3.5 per cent. Taishin’s proposal is seen as friendly and is preferred by Shin Kong’s management. Taishin raised its offer for Shin Kong last week to fend off CTBC’s bid, valuing Shin Kong at NT$14.18 a share via a stock-swap deal subject to shareholder approval. BLOOMBERG
