WING Lung Bank Ltd, the family-run Hong Kong lender whose stock has gained 52 percent this year, will likely select the buyer for a majority stake next week, three people familiar with the matter said.
Industrial & Commercial Bank of China Ltd, Australia & New Zealand Banking Group Ltd and China Merchants Bank Co are in final talks with Wing Lung's controlling shareholders on the price and terms of the acquisition, the people said, asking not to be identified before a decision is made.
Chairman Michael Wu, 71, and his cousins Patrick Wu and Philip Wu are seeking to sell a combined 53-percent stake in the 75-year-old lender. The deal, which would trigger a general offer, will value Wing Lung Bank at more than US$4.8 billion, the people said. Wing Lung fell 0.3 percent at the midday break in Hong Kong, shaving the bank's market value to US$4.3 billion.
Significant deal
The deal would mark the first acquisition of a Hong Kong-traded bank in more than four years. ICBC, the world's largest bank by market value, and China Merchants Bank are seeking to expand in Asia, using money raised in stock sales. For ANZ, led by former HSBC Holdings Plc executive Mike Smith, Wing Lung Bank offers a stepping stone into China, the fastest-growing major economy.
Wing Lung's financial advisers invited China Merchants Bank to make an offer after Bank of Communications Ltd dropped out of the last round of bidding, the people said.
The bank had total equity of HK$12.5 billion (US$1.6 billion) as of December 31. That translates into HK$53.80 of book value per share. The bidders may offer to pay between 3 to 3.5 times book value, valuing the lender at US$4.8 billion to US$5.6 billion, people familiar with the transaction said last month.
Wing Lung fell to HK$143.70 in Hong Kong trading, after closing at the highest in at least 18 years on Wednesday.
Taiwan's Fubon Financial Holding Co Ltd bought International Bank of Asia, formerly owned by Arab Banking Corp, for about US$415 million in 2003, according to Bloomberg News data. The deal valued the target at 1.16 times book value.
Wing Lung on April 30 posted a first-quarter loss after writing off HK$476.7 million of investments.