Singapore bank Oversea-Chinese Banking Corporation Limited is acquiring Hong Kong-based Wing Hang Bank, Limited for about US$5 billion.
Through its wholly owned subsidiary, OCBC Pearl Limited, the bank will acquire the entire issued share capital of Wing Hang Bank, which is listed on the Hong Kong Stock Exchange, at an offer price of HK$125 per WHB share, or a total of HK$38,428 million (approximately S$6,234 million) in cash.
In a statement, OCBC says bank has sufficient financial resources to satisfy the full acceptance of the offer, through its own internal cash and cash-equivalent resources and/or a committed loan facility.
At HK$125 in cash for each WHB share, the price works out to a premium of approximately 1.6 per cent to the last closing price of HK$123, and a premium of approximately 67.3 per cent to the 90-day average price (as of 16 September 2013 close).
The proposed acquisition value is approximately 1.77 times WHB’s consolidated net book value as at 31 December 2013. The bank considers this to be a fair price given the intrinsic value it sees in WHB’s network, customer franchise and business capabilities.
OCBC Pearl has received irrevocable undertakings to accept the offer from a number of WHB’s shareholders, including the Fung family and BNY International Financing Corporation in respect of the aggregate 44.79% of WHB shares which they hold, as well as certain other WHB shareholders in respect of an aggregate of 3.37% of WHB shares.
Wing Hang Bank was founded in Guangzhou, the capital of Guangdong province in mainland China, in 1937, by the patriarch of the Fung family.The bank moved to Hong Kong after World War II.
The acquisition of WHB furthers the OCBC's strategic goal of deepening its presence in its four core markets – Singapore, Malaysia, Indonesia and the Greater China region (China, Hong Kong, Macau and Taiwan). OCBC Bank has been focusing its operations on capturing capital, trade, investment and people flows associated with China through its close relationships with its customers in this region, both onshore and offshore.