Chinatrust Financial Holding Company said Tuesday it plans to buy a 30 percent stake in Taiwan’s Nan Shan Life Insurance Co. for 660 million US dollars.
Taipei-based Chinatrust last month lost out in a bid to acquire Nan Shan from struggling American International Group, being beaten by a consortium led by China Strategic Holdings Ltd.
Chinatrust said China Strategic had agreed to sell a 30 percent stake in Nan Shan in exchange for a 9.95 percent stake in Chinatrust, Taiwan’s largest bancassurance services provider.
Under the terms of their memorandum of understanding, Chinatrust will sell 1.17 billion new shares to China Strategic, equivalent to a diluted 9.95 percent stake, for 20.8 billion Taiwan dollars (660 million US).
Chinatrust said it would then buy 30 percent of Nan Shan from China Strategic for 660 million US dollars.
The deal came after China Strategic, in a consortium with Primus Financial Holdings Ltd., acquired Nan Shan from AIG for 2.15 billion US dollars last month.
Chinatrust chief investment officer Daniel Wu told reporters that his firm would appoint Nan Shan’s chief executive, and China Strategic would name the insurer’s chairman, though the appointments needed to be mutually agreed.
The company said the 1.17 billion new shares were part of a planned private placement of 2.5 billion shares at 17.74 Taiwan dollars each.
It said it expected to complete the entire transaction in the second quarter of 2010.
Chinatrust Financial plans to raise its stake in Nan Shan to more than 50 percent within three years, Wu said. “We can raise (our stake) by buying in cash or through a share swap, or other alternatives, subject to agreement by both sides,” Wu said.
Chinatrust said earlier that it was consulting with lawyers on why its offer to AIG was unsuccessful and that it was not ruling out taking legal action against the company.