Li's BEA puts up defences against predators
The family-controlled bank issues new shares to friendly Sumitomo as Guoco circles the prize
Bank of East Asia (BEA) said yesterday it had agreed to issue new shares to Japan's Sumitomo Mitsui Banking, a move seen as protecting the interest of the controlling Li family against a potential bidding war for BEA.
Meanwhile, Guoco, BEA's second-largest declared shareholder, has suspended its shares pending a possible privatisation.
Sumitomo Mitsui agreed to buy 111.57 million new shares at HK$29.59 per share for about HK$3.3 billion. BEA closed at HK$29.70 yesterday.
"The new share issue would dilute some existing shareholder's holding and protect the Li family's control of BEA," said a banker at a major investment bank in Hong Kong who did not want to be named.
The Japanese lender's stake in BEA will rise to 9.5 per cent from 4.73 per cent and will remain the third-largest declared shareholder. Spain's CaixaBank, an ally of chairman and chief executive David Li Kwok-po's family - which, under listing rules, does not have to declare its holding - has 17.1 per cent and is the largest external shareholder.
Guoco, which holds 15.26 per cent, has long been rumoured to have an eye on Hong Kong's third-largest bank which was founded by the Li family in 1918.
Malaysian tycoon Quek Leng Chan has been buying the blue-chip lender's shares on the market through Guoco, his Hong Kong-listed arm. Guoco acquired 6 per cent of BEA's shares on the market in July 2009 and has steadily increased its stake.