Blocked Deal: 4 Shocking Reasons CITIC Financial’s Bid for Shin Kong Finance Hit a Regulatory Roadblock

Shin Kong Gold Sale Stuck in Ssangyong’s Pearl Grab

Regarding CITIC Financial’s application for a public acquisition, the Financial Supervisory Commission announced today that the investment plan did not fully plan for various possible merger scenarios.

The buyer has four main concerns, including the incomplete shareholding plan and merger plan, and the lack of specific implementation materials for the release of shares if the merger is not completed.

The resolution was postponed, that is, it is Shin Kong Gold of CITIC Financial. Public takeover not agreed.

Financial Supervisory Commission’s Concerns

Qiu Shuzhen noted that CITIC Financial’s application for a public acquisition of 10% to 51% of Shin Kong Gold’s issued ordinary shares was received after a review by the Financial Supervisory Commission.

First, CITIC Financial’s investment plan did not fully plan for various possible merger scenarios, resulting in incomplete share purchase plans and merger plans.

Second, there is a lack of specific implementation content for the stock release process.

Third, insufficient understanding of the financial status of invested life insurance subsidiaries.

Fourth: there is no specific content of the capital raising commitment letter; the consideration payment method based on public acquisition stock exchange does not adequately protect the rights and interests of both shareholders.

Financial Industry Regulations

Qiu Shuzhen said that CITIC Financial intends to use the cash portion and the new share issuance portion as consideration for the acquisition.

Although the measures for the administration of publicly offered securities of publicly offered companies stipulate cash, domestic and foreign securities, and other attributes can be used as consideration for acquisition, this approach applies to all industries.

He also noted that in the financial industry, especially those industries that are highly regulated and involve the interests of customers such as financial holding companies, banks, and life insurance companies, if it is a non-consensual merger and acquisition and the issuance of new shares used as a public acquisition consideration, the actual acquisition price will be uncertain.

Financial Supervisory Commission’s Policy Guidance

Qiu Shuzhen stressed that the financial industry’s operations in the financial market must win the trust of society and customers, and be a role model for all walks of life.

Even if the financial market is a free competition market, any merger and acquisition behavior it can not disturb financial order and market stability, need to compete with each other to establish a professional image of the financial market and maintain market order and stability.