OCBC builds Wing Hang Bank stake as takeover gains traction: Update

OCBC, based in Singapore, raised its stake in its target by almost 11 percentage points to 67.8% in the five days to July 22, filings with Hong Kong’s Securities and Futures Commission showed. OCBC had 56.9% on July 17, up just 6.5 percentage points since July 4, filings showed.

Acceptances for the US$5 billion ($6.2 billion) bid dragged earlier this month as Elliott Capital Advisors LP boosted its stake in Wing Hang, which Mizuho Securities Asia said at the time could put pressure on OCBC to raise its HK$125 per ($20) share bid price. The offer, made in April, has been accepted by shareholders including the family of Wing Hang’s Chairman Patrick Fung.

“It’s nice to see this moving in the right direction,” Jim Antos, a Mizuho analyst based in Hong Kong, said by phone. 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% of the shares. Should it fall short, OCBC must ensure that at least 25% of Wing Hang stock remains in public hands, meaning it may have to sell stock to cut its stake. The offer closes July 29.

Koh Ching Ching, a Singapore-based spokeswoman for OCBC, declined to comment on the bank’s increased stake. OCBC bought 346,870 Wing Hang shares at HK$124.7659 each on July 22, taking its holding to 67.8%, a filing with Hong Kong’s SFC showed yesterday.

NO DISTRACTION

OCBC shares gained 0.3% to $9.68 at 10:37 a.m. in Singapore today, the highest intraday level in a month. Wing Hang was unchanged at HK$124.60 in Hong Kong.

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 increased its stake to 7.8%. The stock was bought at HK$125, the same as OCBC’s offer.

“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%, 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, OCBC’s biggest competitor in Singapore, offered US$5.4 billion for Dao Heng Bank Group in April 2001.