(Bloomberg) -- Shin Kong Financial Holding Co., Taiwan’s fifth-largest financial conglomerate, returned to a profit of NT$20.5 billion ($638 million) in the first half as it faces rival takeover bids.
The financial group’s insurance unit was helped by capital gains on stocks and improved hedging costs, it said in a statement. Earnings per share of NT$1.32 compared with a year-earlier loss of NT$0.41.
Shin Kong is at the heart of a bidding war between CTBC Financial Holding Co., which has offered roughly $4.1 billion in cash and stock for a 51% stake, and a lower, mutually agreed deal with Taishin Financial Holding Co. Shin Kong President Stephen Chen on Tuesday affirmed the group’s preference for a tie-up with Taishin.
“Shin Kong wants a merger to deliver sustainable development and won’t necessarily prioritize a higher offer,” Chen said at a briefing in Taipei. “Shin Kong has had a longer relationship with Taishin in terms of deal talks” and a successful “marriage” requires mutual understanding.
Shin Kong, whose founder was a brother of Taishin’s founder, will keep discussing a merger with Taishin, including a potential tweak of their agreed share-swap ratio to make the deal more attractive, Chen said.
“There is only one consensus merger company for Shin Kong, that’s Taishin,” Shin Kong said in a separate statement released at the briefing, denouncing CTBC’s offer as a “raid”.
Tuesday’s result underscores the attraction of Shin Kong, which had an uneven performance during the pandemic. A successful bid would help CTBC vault over two bigger firms to become Taiwan’s biggest financial company.
At least five analysts had downgraded their recommendations on CTBC stock after its bid last month, on concerns it is seeking a business that will need both injections of capital and a lot of management attention.
Separate results last month from Shin Kong’s life insurance unit showed its capital adequacy ratio has rebounded to above 200%, meeting regulatory requirements.
S&P Global Inc. last week placed ratings on various entities of the Shin Kong group on CreditWatch with developing implications of the merger, adding it could lower ratings on key group units if a merger does not materialize, warning that Shin Kong Life cannot maintain its financial profile due to unexpected market volatility.
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