Taishin raises offer for Shin Kong in what could be Taiwan’s biggest financial deal

By Faith Hung

TAIPEI (Reuters) – Taiwan financial conglomerate Taishin said it would raise its offer for peer Shin Kong by 25% to about T$222.4 billion ($7 billion), in a deal that would be Taiwan’s biggest-ever financial services industry merger.

Taishin and Shin Kong’s long-mooted tie-up, announced last month, has had to contend with an unexpected rival bid from CTBC Financial to acquire Shin Kong, though the target says it views Taishin as its preferred bidder.

Taiwan’s financial services industry tends to be quite domestically focused, and Taishin and Shin Kong hope that by merging they can expand their footprint and become a more globally competitive firm while building long-term value.

Taishin will offer 0.672 common shares and 0.175 preferred shares per Shin Kong share for a 100% stake in the revised all-share deal, sweetening the pot from the 0.6022 common share swap offered previously, Taishin and Shin Kong said late on Wednesday.

The offer would convert to T$14.18 per Shin Kong share based on Wednesday’s closing prices, 25% more than was originally offered, Taishin said, although slightly less than the T$14.55 per share offered by CTBC for a 51% stake through a mix of shares and cash.

“Our offer applies to 100% of Shin Kong shareholders, while CTBC’s offer is for only 51% of shares. What price would the remaining 49% of shareholders be able to get from CTBC (or the market) for their shares?” Taishin President Welch Lin told reporters. “That’s a major uncertainty.”

A merger between Taishin and Shin Kong would make it the island’s fourth-largest financial firm, with estimated combined assets of about T$8.3 trillion.

CTBC declined to comment on Taishin’s raised offer. Gaining control of Shin Kong would make CTBC Taiwan’s largest financial firm with estimated combined assets of T$13.46 trillion, slightly above the T$13.27 trillion held by Cathay Financial.

Taishin shares fell 1.9% on Thursday morning, while Shin Kong was down 1.1%, underperforming a 3% rise in the broader index. CTBC was trading 0.6% lower.