Taipei, Oct. 14 (CNA) IBF Financial Holdings Co. has agreed to acquire EnTie Commercial Bank for approximately NT $ 33.7 billion ($ 1.20 billion) in order to place the bank fully under its umbrella, according to reports. two financial institutions.

In a joint press conference on Thursday, IBF vice president of finance Andrew Chiu (邱 銘 恩) said the two sides had scheduled special general meetings on December 2 to discuss the deal before asking regulatory approval from the Financial Supervisory Commission (FSC).

Currently, IBF Financial manages Rakuten International Commercial Bank, which opened in January to become the first online bank in Taiwan. Rakuten International Commercial Bank is a joint venture with the Japanese bank Rakuten.

IBF Financial, specializing in short-term commercial paper transactions, is the only financial holding company without a physical bank in Taiwan.

Chiu said IBF Financial aims to add a physical bank through the acquisition to expand its services, increase its marketing capacity, boost economies of scale and potentially create synergies.

According to IBF Financial, its commercial paper operations show a return on equity of around 10%, while EnTie Bank has an ROE of around 6% and this figure is expected to rise to 9-10% in the future.

IBF Financial said that after the acquisition, the company will have two main sources of income.

The deal, the financial holding company said, is expected to increase the company’s net worth from NT $ 38.4 billion to NT $ 72 billion with total assets of around NT $ 660 billion and a total workforce. 3,200 employees, including 1,500 EnTie Bank employees.

Chiu said IBF Financial held a board meeting on Thursday to give the green light to purchase EnTie Bank in cash as well as through a share swap. Cash will represent 55% of the acquisition, with the share swap representing the remaining 45%.

As for the share swap, Chiu said IBF will issue preferred shares for the acquisition.

Each of the EnTie Bank shareholders will get around NT $ 9.47 in cash and 0.49 IBF Financial shares for one EnTie Bank share they own, Chiu said.

This translates to NT $ 17.21 for each EnTie share, which represents a premium of 1.2% over EnTie Bank’s closing price of NT $ 17 on Wednesday and a premium of 6.4% over the The bank’s average closing price for the previous 20 trading days, Chiu said.

The purchase price is equivalent to 0.99% of the equity per share of EnTie Bank at the end of June and takes into account the value of the bank’s common stock estimated by the accountants to be between $ 16.13 and $ 19.02. NT, he said.

IBF Financial and EnTie Bank were suspended on Thursday before the acquisition was announced later today. On Wednesday, IBF Financial closed at NT $ 15.50.

To finance the acquisition, Chiu said the company will launch a rights issue for its existing shareholders to raise funds, while the financial holding company has tentatively set the price of the preferred shares for the share exchange at 15. , NT $ 70 with a dividend ratio of 3.85%.

Those who own the preferred shares will be allowed to trade IBF Financial shares one year after the acquisition or the financial holding company will repurchase the preferred shares seven years after the transaction, Chiu said.

IBF Financial has pledged to keep all EnTie Bank employees for three years and protect their rights and benefits, Chiu said, adding that they will receive special bonuses to encourage them to stay.

In a statement, EnTie Bank said that in addition to its employees, the bank’s customers and suppliers will have their rights and benefits well protected after the acquisition.

IBF Financial said the transaction could be finalized by the end of the second quarter of next year, but the deal is still subject to FSC approval.

Once the transaction is completed, EnTie Bank shares will be delisted from the local board of directors, the bank said.