TAIPEI Feb 11 Shares of Taiwan's Cosmos Bank
, controlled by SAC Capital and GE Capital, fell to a
one-month closing low on Tuesday after China Development
Financial Holding Corp agreed to buy Cosmos at a
discount to the market price.
The deal marks Taiwan's first bank M&A, or
merger-and-acquisition, in six years and the second foreign
investor exit from the island's banking sector since TPG Capital
Management LP sold its stake in Taishin Financial
Holding Co Ltd in 2012.
Global hedge funds and private equity firms have struggled
to profit by selling their stakes in Taiwanese banks, which
generate some of the lowest returns among Asian peers because of
overcrowding and the consequent degree of competition. This has
led to calls for consolidation.
"Taiwan banks have to consolidate soon," said Yuanta
Financial fund manager Simon Liu. "It's the most effective way
for them be efficient at home, so that they can better compete
The coming together of China Development and Cosmos, along
with a government drive to merge state-run banks, could be the
beginning of consolidation, Liu said.
Cosmos, whose shares fell as much as 4.5 percent intraday on
Tuesday, would become a wholly owned unit of China Development
in a deal worth T$23.1 billion ($762.44 million), the pair said
The deal, in which Cosmos was advised by Citigroup
according to a person familiar with the matter, would mean China
Development buying Cosmos shares for 2.6 percent less than the
shares' Monday closing price.
Shares of Cosmos closed down 4.2 percent compared with a
rise of 1.6 percent in China Development and 0.5 percent in the
The deal, which is subject to regulatory approval, would
entail SAC Capital selling its 57.08 percent stake in Cosmos and
GE Capital selling its 22.52 percent stake.
The pair bought their stakes for a combined $900 million in
2007, when Taiwanese banks were forced to write off significant
amounts of bad debt during a surge in credit card defaults.
Global fund peer Carlyle Group LP has also struggled
with its Taiwan bank investment. It planned to sell its stake in
Ta Chong Bank Ltd to Yuanta Financial Holdings Co Ltd
in 2012, but was unable to because of disagreement
Longreach Group is also looking to sell its stake in EnTie
Commercial Bank Ltd.
Among state-run banks, the government has made it a priority
this year to merge Mega Financial Holding Co Ltd with
an as yet unspecified rival.