OCBC unfazed by hedge fund's stakebuilding in Wing Hang Bank
Oversea-Chinese Banking Corp, which is buying Wing Hang Bank, achieved the "most important thing" by gaining control of more than 50 per cent of the Hong Kong lender, chief executive Samuel Tsien said.
OCBC, as the Singapore lender is known, will forge ahead to garner more Wing Hang stock even as hedge fund Elliott Capital Advisors buys shares of the Hong Kong bank, Tsien said yesterday.
"We know that they're there, but in terms of would it distract us or change us from what we're currently doing, it will not," Tsien said. "We'll just proceed according to the general offer document and if we cannot get 90 per cent, we'll keep the company listed."
OCBC bid US$5 billion for Wing Hang in April, an offer that has been accepted by 50.4 per cent of the shareholders, including the family of Wing Hang's chairman Patrick Fung Yuk-bun and Bank of New York Mellon. Billionaire Paul Singer's Elliott Capital said last week it raised its stake in Wing Hang, which Mizuho Securities Asia said could put pressure on OCBC to raise its offer price.
Elliott Capital raised its stake in Wing Hang to 7.8 per cent by purchasing an additional 8.7 million shares, it said in a filing. The shares were bought at HK$125, the same as OCBC's offer.
"The price we paid is fair and very reasonable, so whatever happens in the market is something that the investors would have to consider," Tsien said. "We'll continue with the strategy because the value will still be realised as long as we own more than 50 per cent."
Under Hong Kong takeover rules, OCBC needs to own at least 90 per cent of Wing Hang's shares to delist the bank. OCBC will have to keep its stake at 75 per cent or less if it fails to meet that acceptance level to delist Wing Hang before the offer expires on July 29.
Shares of Wing Hang Bank may fall by as much as 40 per cent if OCBC does not garner enough to delist the company, Credit Suisse analysts Sanjay Jain and Vineet Thodge wrote in a note to clients.