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Taiwan Life to extend deadline of buyout deal

TAIPEI, Taiwan -- Taiwan Life Insurance Co. has agreed to extend the deadline for completing a deal in which CTBC Financial Holding Co. aims to acquire the mid-sized life insurer.

In a statement filed with the Taiwan Stock Exchange (TWSE) late Friday evening, Taiwan Life said the company's board of directors agreed in a meeting held that day to extend the transaction deadline to June 30, from April 20.

The approved deadline extension reignited market hopes that CTBC Financial, one of Taiwan's leading financial holding companies, will take Taiwan Life fully into its corporate umbrella as part of its plans to broaden the financial holding firm's insurance operations.

On Thursday, shares of Taiwan Life plunged by the maximum daily decline of 7 percent, after Long Bon International Co., one of the life insurer's major shareholders, expressed opposition against the acquisition deal.

On Friday, shares of Taiwan Life fell by an additional 1.84 percent before the Taiwan Life board meeting began. The share price decline came amid fears that if the acquisition deal falls apart, the life insurer would not be able to take advantage of CTBC Financial's broad network to sell products.

Long Bon, which owns a 37 percent stake in Taiwan Life, said that it had decided not to extend the deadline for the transaction if the deal is not completed by April 20.

In late October 2013, CTBC Financial announced that it would acquire Taiwan Life through a stock swap. CTBC Financial had planned to use 1.44 common shares in exchange for one Taiwan Life share and to use one preferred share for one Taiwan Life preferred share to bring the life insurer under its corporate umbrella.

CTBC Financial said the benefits of Taiwan Life's customers and employees will be fully protected after the acquisition. The deal was valued at about NT$26.6 billion.

Long Bon filed a motion in Taiwan Life's board meeting Friday to discuss its opposition against the deadline extension. According to the local media, 10 directors on the board of Taiwan Life went through an intensive debate, which lasted for more than eight hours, before reaching an agreement on the extension.

Long Bon, which holds four of the seats on Taiwan Life's 10-seat board of directors, had previously wanted to use its weight in the board to sway other directors to support its decision.

However, government owned Bank of Taiwan, another major shareholder of Taiwan Life, which owns an approximately 18 percent stake in the life insurer and three seats of the board of directors, won support from three independent directors to approve the deadline extension.

CTBC Financial said in a statement filed to the TWSE that the company respects the decision of Taiwan Life's board.

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