On 16 September 2024, Taiwan’s Financial Supervisory Commission (FSC) rejected an application from CTBC Financial Holding Co. to launch a tender offer for Shin Kong Financial Holding Co., potentially clearing the path for Taishin Financial Holding Co. to proceed with its proposed merger with Shin Kong Financial.

Jean Chiu, vice chairperson of the FSC, stated at a press conference that CTBC Financial failed to provide a comprehensive implementation plan for the acquisition. CTBC had proposed acquiring between 10% and 51% of Shin Kong Financial’s shares initially, with plans to later fully integrate the company.

However, the FSC raised concerns over CTBC’s lack of detailed provisions on how it would manage various potential outcomes, particularly if it failed to secure full control of Shin Kong.

Additionally, the FSC highlighted gaps in CTBC’s understanding of the financial health of Shin Kong’s life insurance subsidiary, as well as a lack of firm commitments regarding raising the capital size of this subsidiary.

This uncertainty, combined with the method of payment proposed by CTBC—using a mix of cash and its own stock—raised concerns that the tender offer could negatively affect shareholders due to potential fluctuations in CTBC’s stock price during the transaction process.

CTBC’s proposal, announced on 20 August, included an offer of NT$4.09 (US$0.13) per share in cash and an exchange of 0.3132 CTBC shares for each Shin Kong share, amounting to NT$14.55 (US$0.46) per share. This bid was labeled by Taishin Financial as a hostile takeover attempt, as Shin Kong Financial’s board had not approved the offer.

In response, Taishin Financial, which has been vying for Shin Kong through a merger, revised its stock swap offer on 11 September.

The new offer included 0.672 Taishin shares plus 0.175 preferred shares for each Shin Kong share, translating to NT$14.18 per share—closer to CTBC’s offer. Taishin had earlier disclosed on 22 August its original plan to offer 0.6022 shares of its stock per Shin Kong share, which amounted to NT$11.32 (US$0.36).

Chiu emphasized that tender offers based on stock payments are rare in Taiwan, with only six cases since the 2002 revision of tender offer regulations.

She referenced Fubon Financial Holding’s acquisition of Jih Sun Financial in 2023, where cash was used instead of shares, to highlight how tender offers have traditionally been handled in the local market.

Chiu concluded by stating that although Taiwan’s financial market operates on free-market principles, takeovers should avoid disrupting market order and respect corporate stability.

Taishin Financial and Shin Kong Financial are set to hold a special general meeting on 9 October to secure shareholder approval for their merger plan, which will then require the FSC’s endorsement.

TAIPEI, TAIWAN — Taiwan will unveil its first domestically built submarine on Thursday, with the massively outgunned island seeking to bolster its defences against China.

China claims self-ruled Taiwan as its territory, and has in the past year stepped up military and political pressure, ramping up the number of warplane incursions around the island while diplomatically isolating it.

Taiwan has increased defence spending — allotting a record US$19 billion for 2024 — to acquire military equipment, particularly from its key ally the United States, but its quest to obtain a submarine has faced obstacles.

President Tsai Ing-wen — strongly opposed by Beijing for her refusal to accept China’s authority over the island — launched a submarine programme in 2016 with the aim of delivering a fleet of eight vessels.

Construction on the first started in 2020 by the island’s CSBC Corporation, a company specialising in container ships and military vessels, and it will be unveiled by Tsai in the southern port city of Kaohsiung.

Carrying a price tag of US$1.5 billion, the submarine’s displacement weight is about 2,500 to 3,000 tons, with its combat systems and torpedoes sourced from the US defence company Lockheed Martin.

“The submarine will have a fairly significant impact on Taiwan’s defence strategy,” said Ben Lewis, a US-based independent analyst who focuses on the Chinese military’s movements around the island.

“The biggest risk is to the PLA’s (People’s Liberation Army’s) amphibious assault and troop transport capabilities,” he told AFP, referring to China’s military.

“They have practised extensively the use of civilian vessels to augment their existing troop delivery platforms, and a submarine could wreak havoc on vessels not designed for naval warfare.”

The submarine will still need at least three years to become operational, said Zivon Wang, a military analyst at Taipei-based think tank the Chinese Council of Advanced Policy Studies.

“The launch… does not mean that Taiwan will become very powerful right away but it is a crucial element of Taiwan’s defence strategy and a part of our efforts to build deterrence capabilities.”

China’s state-run Global Times on Monday published an op-ed saying Taiwan’s submarine deployment plan to block the PLA was “daydreaming”.

“The plan is just an illusion of the island attempting to resist reunification by force,” it said.

Last week, China flew 103 warplanes around Taiwan, which the island’s defence ministry said was among the highest in recently recorded incursions, decrying the “destructive unilateral actions”.

Beijing has also sent reconnaissance drones to the eastern side of Taiwan — a move that analysts have said could spell trouble for the island’s military bases there.

— AFP