OCBC owns 97.52% of Wing Hang allowing it to delist lender: Update

Oversea-Chinese Banking Corp. said it now owns 97.52% of Wing Hang Bank as shareholders accepted its US$5 billion ($6.2 billion) takeover offer, allowing the acquirer to take its Hong Kong target private.

The Singaporean buyer, Southeast Asia’s second-largest lender, will delist Wing Hang, it said in a statement to the city’s stock exchange today, the last day of the offer. Hong Kong takeover rules required OCBC to own at least 90% of Wing Hang’s shares before the target could be delisted.

“Even at the 75% level, I suspect OCBC will be intending to do a lot with Wing Hang Bank,” Kevin Kwek, a Singapore-based analyst at Sanford C. Bernstein & Co., said before today’s statement. “Most banks would be happy enough with a 75% level of ownership. It gives you management control as well as sufficient financial upside and motivation to improve the subsidiary.”

Acceptances for the bid dragged earlier this month as hedge fund Elliott Capital Advisors LP boosted its stake in Wing Hang to 7.8%, which Mizuho Securities Asia said at the time could put pressure on OCBC to raise its HK$125 ($20) per-share bid price.

Richard Barton, managing partner at Newgate Communications in Hong Kong, declined to comment on behalf of Elliott.

On completing the compulsory acquisition of the remainder of the shares, Wing Hang will become a subsidiary of OCBC, the Singapore lender said in today’s statement.

Integrating Operations

“Integrating the operations and businesses of Wing Hang Bank with OCBC will now pick up speed,” Samuel Tsien, Chief Executive Officer of OCBC, said in a separate statement.

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 the Singaporean lender has a larger presence, Tsien said. Wing Hang gives OCBC a network of about 70 branches spanning Hong Kong, Macau and mainland China.

The owners of Wing Hang’s corporate clients, comprising primarily of small and medium-sized companies, are also targets for OCBC’s private-banking business, Tsien said in a July 10 interview.

Shares of OCBC rose 0.21% to $9.76 in Singapore today. Wing Hang lost 1.77% to HK$121.80 in Hong Kong, paring its gain in the past year to 69%.

The Hong Kong bank’s shares 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.

Offer Price

OCBC said through its advisers on the deal that it won’t raise its offer price, according to a July 15 statement. OCBC’s Tsien said in this month’s interview the bank would keep Wing Hang listed should it fail to get 90% of the target’s stock. At least 25% of Wing Hang stock must remain public to maintain its listing in Hong Kong.

Hong Kong banks are luring foreign buyers seeking to tap China-related business in a city that is the biggest center for offshore yuan trading. Outstanding loans in Hong Kong made in China’s currency surged 46% last year to 115.6 billion yuan ($23.2 billion), Hong Kong Monetary Authority data show.

The Wing Hang 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. Yue Xiu Group, controlled by the Guangzhou city government in southern China, completed in February a US$1.5 billion purchase of a majority stake in Chong Hing Bank.