China Merchants Banks yesterday announced it had agreed to buy the controlling stake of Wing Lung Bank for HK$19.3 billion in cash from the founding Wu family.
Merchants Bank will make a general offer for the rest of the Wing Lung shares after completing the acquisition, bringing the total consideration to HK$36.33 billion. Wing Lung was established more than 75 years ago.
'The acquisition offers a unique opportunity for CMB to establish a sizeable customer base and distribution network in Hong Kong,' it said.
The two lenders said yesterday in a joint statement that Merchants Bank would take a 53.12 per cent stake at HK$156.50 per share, which is 2.91 times Wing Lung's book value last year.
The purchase price represents a premium of about 6.17 per cent to Wing Lung's closing share price of HK$147.40 on May 29.
Merchants Bank said it would retain the bank's name and was committed to the continuity of Wing Lung's employees for at least 18 months from the completion date.