WLB is a small and well-managed Hong Kong bank with 1.4 percent of 2007 loan market shares and 35 strongly performing small- and medium-sized enterprise (SME) banking franchise outlets in Hong Kong. The transaction amounts to 17.2 billion yuan, at HK＄ 156.5 per share, to be paid in cash by China Merchant. The acquisition will need reviewing by regulators in both Beijing and Hong Kong. China Merchant also needs shareholder approval. Transaction is expected to be finalized by end of this year.
According to Hong Kong regulations,
christian louboutin, provided that a 30 percent stake is to be acquired,
abercrombie and fitch, a tender offer to the rest of the shareholders is required.
The same source said that “during the entire negotiation, China Merchant had in mind balancing its business expansion with maintaining domestic business and profit-making ability.”
China Merchant acquiring WLB seeking to expand into, marking the first time a Chinese bank will acquire a controlling stake in a bank outside of mainland China.
A source close to the transaction told Caijing that both parties conducted direct negotiations in late April and that the decision making procedure was fairly market-driven. “As soon as the board approves and the regulators are acknowledged, they carried this forward,” the source said.
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A source close to the deal said that China Merchant promised to maintain traditions and keep the “WLB” brand. Also, the Chinese bank promised not to change the rights of management and staff over the next 18 months.
In this transaction, China Merchant paid a 2.91 price to book ratio price, according to the audited per book value of the bank for 2007.
Further,
piumini moncler, once the transaction is approved by regulators, it will be the most expensive deal in Hong Kong since 2001. In that year,
moncler, Singaporean DBS acquired a 71.3 percent stake in Hong Kong's Daoheng at a price of HK＄ 44.5 billion.
By staff reporter Xu Ke, Bi Aifang and Yu Ning
A source close to the transaction said that “the acquisition of 51.3 percent will not affect the bank's capital adequacy too much.” But, China Merchant will consider enhancing capitalization by offering subordinated debts, possibly leading to dilution or high funding costs.
Bidding for WLB started in March when its price was HK＄ 80 per share, and rose to HK＄ 155 by mid May. Among other competitors including CCB, CIBC,
abercrombie, and Bank of Communications,
moncler, China Merchant is the most potential buyer,
coach outlet, since the bank only has one branch in Hong Kong and the management expressed on several occasions interest in expanding franchises in Hong Kong.
Goldman Sachs noted in its report that challenges to achieve synergies include China Merchant's upper-class retail banking franchise versus WLB's SME baking focus, especially given CMB's intention to keep the“Wing Lung Bank” brand in Hong Kong.
A source from China Merchant told Caijing that the bank lacks outlets in Hong Kong but demands them for across-the-board financial services. The source said “the acquisition fills the needs and adapts to the bank's expansion strategy in retail banking.”
After several months of competition, the battle for acquiring Wing Lung Bank Ltd. (HKSE: 0096) ended. On May 30,
louboutin, China's fifth largest commercial bank, China Merchant (SHSE: 600036),
abercrombie, agreed to buy a 53.1 percent stake from the Wu family who have control the Hong Kong bank for 75 years. The acquisition marks the first instance that a Chinese bank will acquire a controlling stake in a bank beyond the shores of mainland China.
Yet,
doudoune moncler, the transaction is likely to lower capital adequacy of China Merchant. By the end of 2007, the core capital ratio was 9.02 percent and core capitalization stood at 63.7 billion yuan. Goldman Sachs said in a recent report that if China Merchant purchased WLB at HK＄ 152 per share, core capital ratio would drop to 6.8 percent after goodwill deduction post 100 percent WLB acquisition.
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