Citigroup to buy stake in Taiwan bank - paper http://today.reuters.com/news/articleinvesting.aspx?type=mergersNews&storyID=2006-08-24T051338Z_01_TP207766_RTRIDST_0_FINANCIAL-TAIWAN-CITIGROUP.XML
Thu Aug 24, 2006
TAIPEI, Aug 24 (Reuters) - Citigroup (C.N: Quote, Profile, Research) will soon resume talks with Bank of Overseas Chinese (5818.TWO: Quote, Profile, Research) to buy a 50 percent stake valued at T$13 billion (US$396 million) in the Taiwan bank, a local newspaper reported on Thursday. Citigroup had offered to pay more than T$10 per share for the stake, the Economic Daily said, a roughly 40 percent premium over the current share price for Bank of Overseas Chinese.
But the money-losing bank was not happy with the offer and had asked Citigroup to raise its price, the Chinese-language newspaper said, without citing sources.
Bank of Overseas Chinese gave an exclusive right to Citigroup over HSBC (0005.HK: Quote, Profile, Research) and ABN AMRO (AAH.AS: Quote, Profile, Research). They had presented their proposals on merging the Taiwan lender, the paper said.
Citigroup, the most profitable foreigner lender in Taiwan, declined to comment on the report, Country Officer Morris Li told Reuters by telephone. The planned stock sale could be done via a private placement as Bank of Overseas Chinese planned to raise T$13 billion by issuing new shares by the end of this year, the paper said.
By 0440 GMT, Bank of Overseas Chinese shares had dropped 3.41 percent to T$7.09, while the main TAIEX <.TWII> had fallen 0.28 percent.
The Taiwan lender and all of its bigger rivals have been struggling since 2005 as the banking sector was hit by a consumer credit crisis on the island, hurting profits and stock prices.
But some foreign private equity funds or banks see that as a good chance to raise their exposure in Taiwan.
Last year, Polaris Group bought a 33 percent stake of Bank of Overseas Chinese and became its single largest shareholder.
The lender had losses of T$783 million last year and lost T$2.5 billion in 2004. (US$1=T$32.8)
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