Despite concerns in market over valuation of Hong Kong-based Wing Hang Banks, Singapore’s OCBC is to be expected acquisition deal for will be completed in third quarter. Oversea-Chinese Banking Corp is Southeast Asia’s second-largest bank by assets.
Source: Bloomberg Business News
Aberdeen Asset Management Plc, the third-biggest shareholder in Wing Bank Bank Ltd.(00302.HK), agreed to sell its shares in the lender to Oversea-Chinese Banking Corp. (OCBC), moving the Singaporean buyer closer to a full takeover.
“We’ve tendered” the entire stake Aberdeen held in Wing Hang, Hugh Young, a Singapore-based managing director at the fund management company, wrote in an e-mail today without saying when the sale took place. Aberdeen owned 7.4 percent of the Hong Kong-based target as of July 1, data compiled by Bloomberg show.
The fund manager’s decision came as Hong Kong regulatory filings showed acceptances for the $5 billion offer had accelerated in the past week. They had dragged earlier this month as Elliott Capital Advisors LP boosted its stake in Wing Hang to 7.8 percent, which Mizuho Securities Asia Ltd. said at the time could put pressure on OCBC to raise its HK$125 per-share bid price.
“Elliott not increasing its stake beyond 8 percent and Aberdeen tendering should help the offer in a very significant way,” Wee Siang Ng, Singapore-based head of research at Maybank Kim Eng Research Pte, said by phone today. “Minority shareholders who wanted to hold back for a higher offer price initially would probably be more willing to surrender their shares.”
Shares of OCBC, Southeast Asia’s second-largest lender, gained 0.8 percent to S$9.73 at 4:19 p.m. in Singapore today, poised for the highest close since June 16. Wing Hang added 0.1 percent to HK$124.70 in Hong Kong.
Koh Ching Ching, a Singapore-based OCBC spokeswoman, declined to comment today. Aberdeen owned 6.8 percent of OCBC as of May 7, an investment worth about $1.9 billion as of today’s prices, data compiled by Bloomberg show. The 7.4 percent stake in Wing Hang tendered by the fund manager would have been worth about $360 million.
“I thought Aberdeen would definitely support the offer as it has much to lose if OCBC shares don’t do well,” Maybank’s Ng said. “Their investment in OCBC is so much bigger than in Wing Hang.”
The Singaporean lender’s offer, made in April, has been accepted by shareholders including the family of Wing Hang’s Chairman Patrick Fung and Bank of New York Mellon Corp.
OCBC raised its investment in Wing Hang by almost 11 percentage points to 67.8 percent in the five days to July 22, filings with Hong Kong’s Securities and Futures Commission showed. OCBC had 56.9 percent on July 17, adding just 6.5 percentage points since July 4, filings showed.
“It’s nice to see this moving in the right direction,” Jim Antos, a Mizuho analyst based in Hong Kong, said by phone yesterday. For minority shareholders, “HK$125 is a more than fair price for Wing Hang Bank. Looking at the history of bank mergers in Hong Kong, it’s a fair deal.”
Hong Kong regulations allow OCBC to delist Wing Hang once it owns 90 percent of the shares. Should it fall short, OCBC must ensure that at least 25 percent of Wing Hang stock remains in public hands, meaning it may have to sell stock to cut its stake. The offer closes July 29.
Shares of the Hong Kong bank traded as high as HK$127 on July 7 after Elliott Capital said in a July 3 filing it had paid HK$125 a share — the same as OCBC’s offer price — to increase its stake. OCBC won’t increase its bid, its advisers Bank of America Corp. and JPMorgan Chase & Co. said in a July 15 statement.
“We know that they’re there, but in terms of would it distract us or change us from what we’re currently doing, it will not,” Chief Executive Officer Samuel Tsien said in a July 10 interview. ‘We’ll just proceed according to the general offer document and if we cannot get 90 percent, we’ll keep the company listed.’’
The acquisition will give OCBC more access in the Greater China region and enable both banks to offer services to Chinese companies expanding in Southeast Asia, where it has a larger presence, Tsien said. Wing Hang gives OCBC a network of about 70 branches spanning Hong Kong, Macau and mainland China.
The bid is the largest takeover of a Hong Kong bank since DBS Group Holdings Ltd., OCBC’s biggest competitor in Singapore, offered $5.4 billion for Dao Heng Bank Group Ltd. in April 2001.