Ta Chong Securities shares rise on confirmation of acquisition deal

Taipei--Shares of Ta Chong Securities (????) soared Monday morning after Taishin Securities announced over the weekend that it planned to acquire the company at a premium of almost 9 percent, dealers said.

However, the upturn in Ta Chong shares seemed limited as the stock had already been gaining significantly in recent sessions on speculations over the acquisition deal, dealers said.

As of 10:30 a.m., shares of Ta Chong Securities were up 6.31 percent at NT$10.95 (US$0.35) on the local over-the-counter market, while the index had climbed 0.72 percent to 134.99 points.

Shares of Taishin Financial Holding Co. (???), which holds a 100 percent stake in Taishin Securities, had gained 0.83 percent, rising to NT$12.20 on the Taiwan Stock Exchange, while the weighted index was up 0.45 percent at 9,671.65 points.

"The acquisition deal sparked buying in Ta Chong Securities soon after the local equity market opened as the acquisition speculations were confirmed," MasterLink Securities analyst Tom Tang said.

At a news conference Friday, Taishin Securities said it had agreed to acquire Ta Chong Securities for NT$4.23 billion in cash or NT$11.2 per share, which represented an 8.73 percent premium over Ta Chong Securities' closing price of NT$10.3 on Friday.

The deal is expected to be completed by the end of July, pending approval by the Financial Supervisory Commission, according to Taishin Securities. Taishin Securities' market share in the local securities brokering business is forecast to grow from 0.57 percent to more than 1 percent on the back of the deal, thus making the company eligible to manage investments of government-run funds.

Currently, Taishin Securities has three branches in Taiwan with a paid-in capital of NT$1.63 billion, while Ta Chong Securities has 15 branches and is capitalized at NT$2.61 billion.

After the acquisition, Taishin Securities will remain in the market, while Ta Chong Securities will be fully absorbed by Taishin Securities and will disappear from the market.

To finance the acquisition deal, Taishin Securities will make a rights issue to raise NT$3.73 billion and Taishin Financial will buy all of the new shares issued by the subsidiary.

On Monday, after Ta Chong Securities shares hit an early high of NT$11, the stock seemed to encounter some technical hurdles, according to Tang.

"Some investors were simply cashing in on the news by locking in their gains from recent sessions," Tang said. "The acquisition price could be a ceiling for the stock."

He said investors were also keeping an eye on a draft bill to slash the transaction tax for day trading by half to 0.15 percent, which would boost turnover on the local equity market and is expected to strengthen the bottom line of the local securities industry.

Source: Focus Taiwan News Channel