CTBC Financial Holding to swell on two blockbuster acquisitions
By Ted Chen ,The China Post
December 21, 2013, 12:07 am TWN
TAIPEI, Taiwan -- Insurance carrier Taiwan Life (台灣人壽) yesterday called an extraordinary general meeting, with the company's board announcing to shareholders that it has approved plans to be acquired by and merged into CTBC Financial Holding Co. (CTBC, 中國信託人壽).
During his address at the occasion, Taiwan Life Chairman Chu Ping-yu (朱炳昱) stated he expects the transitional process to conclude smoothly, as many current high-ranking managers at CTBC Life have been previously employed by Taiwan Life.
Following the union, CTBC stands to gain Taiwan's Life's subsidiaries including it's non-life insurance arm TLG Insurance (台壽保產險), its China-based King Dragon Life Insurance Co., Ltd. (君龍人壽) and Taiwan Life's overseas business units in Hanoi and Beijing.
Taiwan Life's meeting yesterday was attended by 80 percent of its shareholders with voting rights, of which 95.1 percent consented to completing the merger via a swap of shares, at the rate of 1.44 shares of CTBC shares for 1 share of Taiwan Life, with the latter becoming a wholly owned subsidiary of CTBC.
In the best interest of the two companies' marketing efforts following the merger, Chu stated that he hopes to see the process completed before the end of next year, despite a two-year timetable allowed by regulators. Chu also expressed his wish to preserve Taiwan Life's brand name.
According to Chu, backed by the formidably deep pockets of the CTBC group, the merger represents the most ideal move to ensure Taiwan Life's future prospects. Currently, investment and expansion allocations in recent years has been capped at about NT$1 billion, a level that does not allow the company to greatly increase market coverage by hiring more insurance sales agents, said Chu. In addition, with banks commanding over 65 percent of new contracts, there is little chance for expansion of operations such as Taiwan Life, which relies on the traditional sales channels of employing insurance policy salespersons.
Taiwan Life's former parent company Long Bon International Co. (龍邦集團) stands to gain a 3.2-percent stake in CTBC following the union, according to reports. Overall, shareholders of Taiwan Life will control an estimated 8.5-percent stake in CTBC following the merger.
Long Bon International Co.'s holding of CTBC Financial shares is expected to exceed NT$10 billion in value, however, Chu did not clarify whether he will seek a seat on CTBC's board of directors after the deal.
CTBC Gains Foothold in Japan Market
Meanwhile, regulators also approved CTBC's bid to acquire a 98.16-percent stake in Japan-based Tokyo Star Bank (東京之星). CTBC's request to adjust the Japanese company's charter, reducing its board of directors from nine to 13 seats to seven to 11 seats. In response to concerns over Tokyo Star Bank's less than stellar profitability, CTBC stated that earnings for the company have in the first quarter improved to the 8.4-billion yen benchmark, and that the acquisition was completed at a favorable price. The deal would also provide CTBC with a presence in the Northeastern Asian region, said the company.