Wing Hang Bank Tumbles After OCBC Said to Bid: Hong Kong Mover

Jan 06, 2014 1:47 am ET

Jan. 6 (Bloomberg) -- Wing Hang Bank Ltd. shares fell the most in almost 20 months in Hong Kong after Oversea-Chinese Banking Corp. was said to bid less for the family-run lender than its owners are seeking.

Wing Hang stock sank as much as 6.1 percent, the biggest intraday slump since May 2012, to HK$110. It traded 1.4 percent lower at HK$115.60 before a suspension from 11:39 a.m. local time pending a statement under the city’s takeover code, according to an exchange announcement. OCBC, Southeast Asia’s second-biggest lender, fell 1.5 percent to S$9.87 in Singapore, before its trading was halted.

OCBC conducted due diligence and bid less than the two times book value Wing Hang was seeking, two people familiar with the matter said Jan. 3. The Hong Kong lender’s HK$35.7 billion ($4.6 billion) market capitalization is about 1.7 times estimated 2013 book value, data compiled by Bloomberg show. The purchase would be OCBC’s biggest acquisition, giving it a network of 70 branches in Hong Kong, Macau and mainland China.

“It seems there are not many other bidders for Wing Hang and if the bidding price is 1.8 or 1.9 times, there’s only 10 percent potential upside for the stock,” Edmond Law, an analyst at UOB Kay Hian Holdings Ltd. in Hong Kong, said by phone. “Most investors will start to take profit given that there’s a lot of uncertainties.”

Anbang Insurance Group, a Beijing-based insurer, indicated it wouldn’t pay more than 1.7 times the book value of Wing Hang, two people with knowledge of the matter said last month. Anbang said Jan. 3 it spent 1.43 billion yuan ($236 million) to increase its stake in China Merchants Bank Co. to 7 percent from 6.36 percent.

Attracting Interest

Hong Kong’s family-run banks, squeezed for years by larger competitors including HSBC Holdings Plc and Bank of China Ltd., are attracting interest from acquirers as the city’s role in cross-border financing expands. Yue Xiu Group agreed in November to buy a majority stake in Chong Hing Bank Ltd. for $1.5 billion, the first acquisition of a Hong Kong lender since 2009.

The family of Wing Hang Chairman Patrick Fung, its affiliates and Bank of New York Mellon Corp. together hold about 45 percent of shares in the Hong Kong lender.

Its presence across southern China’s Pearl River Delta makes it a more attractive target than other smaller family- owned banks in the city, Grace Wu, an analyst at Daiwa Capital Markets Hong Kong Ltd., said by phone on Sept. 17.

--Aipeng Soo. Editors: Nathaniel Espino, Darren Boey