Elliott Stake Thwarts OCBC-Wing Hang Deal

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Elliott Stake Thwarts OCBC-Wing Hang Deal
By World Economic Forum (Flickr: The Global Financial Context: Paul Singer) [CC BY-SA 2.0], via Wikimedia Commons

Hedge fund Elliott Management has enhanced its stake in Hong Kong lender Wing Hang Bank, Limited (HKG:0302) (OTCMKTS:WGHGY) to nearly 8% by acquiring an additional 8.7 million Wing Hang shares last week.

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Oversea-Chinese Banking Corp. Limited (SGX:O39) now holds 50.4% stake in Wing Hang Bank.

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OCBC’s nod from regulators

Last week, OCBC said it had received the go-ahead from regulators in Hong Kong, Singapore and Macau to acquire family-owned Hong Kong lender Wing Hang Bank, Limited (HKG:0302) (OTCMKTS:WGHGY). In its statement to the Singapore stock exchange, OCBC disclosed that till last week, it had garnered a 50.4% interest in Wing Hang, largely through acceptances of its offer.

However, Oversea-Chinese Banking Corp. Limited (SGX:O39)’s offer to acquire Wing Hang shares at HK$125 apiece was conditional on its receipt of enough acceptances to lift its Wing Hang stake above 50%. According to the regulatory filing, the offer will stay open until July 29.

OCBC’s deal was set to be the biggest banking acquisition in Hong Kong since DBS’ takeover of Dao Heng Bank in 2001and was to help OCBC profit from the rapid internationalization of the yuan.

Moreover, with a network of 70 branches, including 42 in Hong Kong and 13 in Macau, Wing Hang provides Oversea-Chinese Banking Corp. Limited (SGX:O39) an instant gateway to the booming Pearl River Delta region.

Elliott’s latest disclosure

In its filing with the Hong Kong Securities and Futures Commission last week, Elliott Management, run by billionaire Paul Singer disclosed that it has acquired an additional 8,712,000 shares at $125 per share.

According to Alex Frangos of The Wall Street Journal, Elliott’s latest acquisition in Wing Hang Bank, Limited (HKG:0302) (OTCMKTS:WGHGY) has made acquirer OCBC’s life suddenly very complicated.

Under Hong Kong rules, OCBC must receive roughly 90% of Wing Hang shares to de-list the Hong Kong lender. However, this looks a tougher proposition thanks to the large stake now held by Elliott.

Hong Kong lender Wing Hang Bank, Limited (HKG:0302) (OTCMKTS:WGHGY) shares closed at HK$126.30 on Monday, shade above the HK$125 a share offered by OCBC in April.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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