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    Apr 02, 2014

    OCBC offers $6b for Wing Hang

    OCBC Bank said yesterday it has offered to buy Hong Kong's Wing Hang Bank for US$4.95 billion (S$6.2 billion), as it seeks to boost its presence in the giant Chinese market.

    OCBC said in a statement the acquisition would provide it with a platform to grow its yuan-denominated businesses, and broaden its access to United States and Hong Kong dollar funds.

    OCBC said its "pre-conditional voluntary general offer" for Wing Hang was made through its wholly owned subsidiary, OCBC Pearl Limited.

    It offered to buy each Wing Hang share at HK$125 (S$20.30), or a total of HK$38.43 billion "in cash", saying it has "sufficient financial resources" to finance the deal.

    The offer price gives a 1.6 per cent premium to Wing Hang shares as of their last closing price of HK$123, and about 67.3 per cent over the 90-day average price, OCBC said in a statement to the Singapore stock exchange.

    OCBC said it has received "irrevocable undertakings" to accept its offer from key shareholders, including the Fung family and BNY International Financing, who hold an aggregate 44.79 per cent of Wing Hang shares.

    Other shareholders holding a total 3.37 per cent of Wing Hang have also agreed to accept the offer.

    OCBC's wholly owned subsidiary, OCBC Bank (China), has 16 branches and sub-branches on the mainland.

    OCBC also has a branch in Hong Kong and another in Taiwan, while its private banking subsidiary, Bank of Singapore, has a branch in Hong Kong.

    Wing Hang has a network of 70 branches in Hong Kong, Macau and China.

    "I personally think that what OCBC has offered is definitely a hefty sum, but it is still slightly below the general estimate consensus of what would have been paid for a Hong Kong bank," said Mr Kenny Kan, market analyst at CMC Markets.

    "Without this acquisition, it would have taken a longer period of time for OCBC to reach out to a larger base in the Greater China area," he said. Mr Kan said Hong Kong is attractive because it is the world's largest offshore market for the yuan.

    OCBC shares closed at S$9.56, up 0.53 per cent after a trading halt imposed on Friday was lifted. Wing Hang Bank added 0.16 per cent to HK$123.20.