CTBC Financial Holding’s bid to acquire smaller peer Shin Kong, which aimed to create Taiwan’s largest financial conglomerate and a regional competitor to firms like Hong Kong’s Standard Chartered Bank, Japan’s Nomura Holdings and Singapore’s United Overseas Bank, came to a sudden halt in September.
The island’s Financial Supervisory Commission (FSC) rejected the hostile takeover, stating that the plan lacked details, would lead to volatility in the firms’ share prices and, ultimately, shareholders of the two companies would not be adequately protected.
Still, Shin Kong, Taiwan’s fifth-largest financial conglomerate, faces no shortage of committed suitors. On August 22, just a day before CTBC announced its tender offer for a 51% stake in the company, Shin Kong had agreed on a 100% share swap deal valued at approximately $7 billion with Taishin Holdings, a financial empire with businesses in investment banking, brokerage and underwriting. With CTBC’s withdrawal, Taishin faces no significant hurdles in pursuing Shin Kong.
The merger talks between the two companies have intensified recently, as Shin Kong has shown signs of recovery and returned to profitability under a new executive team after facing a series of crises due to poor management. The proposed merger also comes amid efforts by Taiwanese regulators to bolster the island’s financial sector and diversify its economy beyond its traditional technology focus. Furthermore, the industry faces increasing competition from overseas players, and demand is growing for more complex investment vehicles. Shin Kong’s shareholders are set to vote on the Taishin merger proposal on October 9. Following their decision, the FSC and the Fair Trade Commission will evaluate market consolidation concerns related to the horizontal combination, including potential negative impacts on the companies’ clients and the risk of anticompetitive pricing. The review of the merger application will take up to 90 days. If the regulators approve, the combined entity will become Taiwan’s fourth-largest financial holding company, with assets exceeding $250 billion.