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Ta Chong Bank, Yuanta Financial shares jump on acquisition deal

Ta Chong Bank, Yuanta Financial shares jump on acquisition deal

Taipei, Aug. 14 (CNA) Shares of Ta Chong Bank (????), one of the smaller banks in Taiwan, moved sharply higher Friday morning after Taipei-based Yuanta Financial Holding Co. (???) agreed to acquire the bank at a premium 31 percent above than the bank's closing price Thursday, dealers said. Shares of Yuanta Financial also got a boost from the acquisition deal on hopes that the buy-in will strengthen the company's banking operations by expanding its nationwide network, dealers said. As of 11:06 a.m., shares of Ta Chong had risen by the maximum daily 10 percent to NT$13.65 (US$0.43), with2.58 million shares changing hands. Attracting strong buying, the stock soared 10 percent soon after the local main board opened and strength continued. Shares of Yuanta Financial had climbed 5.17 percent to NT$14.25 on trading volume of 40.98 million shares. The weighted index on the Taiwan Stock Exchange was down 0.18 percent at 8,297.19 points. "The high premium in the acquisition price sparked strong buying in Ta Chong shares," Hua Nan Securities analyst Henry Miao said. "At a time when the broader market remains in consolidation mode, investors are looking to buy stocks like Ta Chong Bank that have positive leads." Yuanta Financial announced Thursday that its fully owned unit Yuanta Commercial Bank will acquire a 100 percent stake in Ta Chong in cash and through a share swap, at a price of NT$16.3 per share, 31 percent higher than the bank's closing price of NT$12.45 that day. Meanwhile, Yuanta Bank will also purchase US$350 million worth of Ta Chong's overseas convertible bonds, which are owned by Carlyle, a Washington-based private-equity firm. Yuanta Financial, therefore, is expected to spend a total of NT$56.55 billion to acquire Ta Chong Bank. "Taiwan's banking sector is saturated. Under such circumstances, it's not easy for smaller banks like Ta Chong to compete," Miao said. "For Yuanta Financial, its subsidiary Yuanta Bank needs to expand to become more competivive in the local market. That's why investors scrambled to pick up Yuanta Financial shares on hopes that Yuanta Bank will benefit from the acquisition." According to Yuanta Financial, the number of Yunata Bank branches in Taiwan will increase from 88 to 155 and the bank's total assets will expand to NT$1.25 trillion to become the seventh largest private-owned bank in Taiwan after the deal is done. Yuanta Financial said the business of Yuanta and Ta Chong banks will be complementary. as the former has a strong customer base in northern and central Taiwan, while the latter has built a network largely in southern Taiwan. In addition, Yuanta Bank is good at corporate banking, and Ta Chong Bank has a broader consumer banking business, Yuanta Financial said. It said that the deal is expected to be completed in the first quarter of next year and the benefits and welfare of Ta Chong Bank's employees will be guaranteed for at least three years after that. (Han Ting-ting and Frances Huang)


Updated : 2021-09-23 02:49 GMT+08:00