In a historic move for Taiwan’s banking and finance industry, Taishin Financial Holding Co. and Shin Kong Financial Holding Co. have received final approval from Taiwan’s Financial Supervisory Commission (FSC) to complete their long-awaited merger. The newly merged entity, TS Financial Holding Co., Ltd., will have total assets of NT$8.43 trillion (US$253.78 billion), making it the fourth-largest financial holding company in Taiwan.
The merger, which has been discussed on and off since 2002, faced multiple hurdles over the years but was finally set in motion in 2023 when Shin Kong Financial’s board shifted in favor of the deal. Now, with regulatory approval secured, the companies are moving forward to finalize the transition.
Merger Details: Structure, Stock Swap, and Financial Implications
The merger will be executed through a stock swap, where Taishin Financial will be the surviving entity while Shin Kong Financial will cease to exist as a separate company.
Under the agreed terms:
- Taishin Financial will exchange 0.672 of its common shares for one Shin Kong Financial common share.
- Taishin will exchange 0.175 preferred shares for one Shin Kong Financial preferred share.
Following the approval, the companies will determine the official merger date and must apply to delist Shin Kong Financial shares from the Taiwan Stock Exchange at least 30 business days in advance.
On the day the approval was granted, Taishin Financial’s stock closed at NT$17.20 per share, while Shin Kong Financial’s shares stood at NT$12.20 per share.
The newly formed TS Financial Holding Co. is expected to expand its market presence across banking, insurance, and investment sectors.
The Long Road to Merger: 22 Years of Negotiations
This merger has been two decades in the making. The first discussions between Taishin Financial and Shin Kong Financial began in 2002 but collapsed due to disagreements over the statutory reserves carried by Shin Kong’s life insurance unit.
Over the years, the idea of a merger was revisited multiple times but never gained traction until June 2023, when Shin Kong Financial elected a new board more open to negotiations.
By August 22, 2024, both companies reached a merger agreement. However, the process was briefly disrupted when CTBC Financial Holding Co. launched a rival bid to acquire Shin Kong through a tender offer on the same day.
To counter CTBC’s move, Taishin revised and sweetened its merger offer on September 11, 2024.
However, Taiwan’s FSC rejected CTBC’s bid on September 16, citing the lack of a comprehensive acquisition plan. CTBC later withdrew its takeover attempt.
Impact on Taiwan’s Financial Sector
The merger aligns with Taiwan’s broader trend of financial industry consolidation, which aims to create stronger, more competitive financial institutions.
In recent years, Taiwan has seen several high-profile mergers:
- In November 2022, Fubon Financial Holding Co. completed Taiwan’s first financial holding company merger with Jih Sun Financial Holding Co.
- Other banks and financial firms are exploring consolidation to improve operational efficiency and increase market influence.
With TS Financial Holding Co. now positioned as Taiwan’s fourth-largest financial holding company, the industry is likely to see further strategic realignments.
FAQs
Why did Taishin Financial and Shin Kong Financial merge?
The merger allows both companies to create a stronger financial entity, improve operational efficiency, expand their market influence, and compete more effectively in Taiwan’s financial sector.
What will happen to Shin Kong Financial after the merger?
Shin Kong Financial will cease to exist as an independent company, and its shares will be delisted from the Taiwan Stock Exchange. Taishin Financial will take over its assets, businesses, and operations.
How does this merger compare to other financial mergers in Taiwan?
This is Taiwan’s second major financial holding company merger after Fubon Financial’s acquisition of Jih Sun Financial in 2022. It follows a broader industry trend of consolidation to strengthen Taiwan’s financial institutions.
Will Shin Kong Financial shareholders be compensated?
Yes, Shin Kong Financial shareholders will receive Taishin Financial shares in a stock swap. The exchange rate is 0.672 Taishin common shares for every 1 Shin Kong common share and 0.175 Taishin preferred shares for every 1 Shin Kong preferred share.
How will the merger affect customers of both companies?
Customers of Shin Kong Financial and Taishin Financial will experience a transition period as their services are integrated. However, the merger is expected to lead to better financial products, improved customer service, and greater banking stability.
