OCBC Bank on Tuesday announced a keenly-awaited bid to acquire Hong Kong-listed Wing Hang Bank, at HK$125 per share or HK$38.4 billion (S$6.2 billion) in cash.
The price works out to a 1.6 per cent premium to Wing Hang's last closing price of HK$123 per share, OCBC said in a statement.
It is also 49 per cent higher than the last closing price of Wing Hang's shares at HK$83.80 on Sep 16 last year, the last trading day before the Hong Kong bank said shareholders were in talks to sell their stakes.
OCBC will be paying about 1.77 times the consolidated net book value of Wing Hang as at Dec 31 last year.
The Singapore bank "considers this to be a fair price given the intrinsic value it sees in Wing Hang's network, customer franchise and business capabilities", it said.
The bank added that a number of Wing Hang's shareholders have agreed to accept its offer for their shares.
They include the Fung family and BNY International Financing Corporation, who together hold 44.79 per cent of Wing Hang shares. Other shareholders with a combined 3.37 per cent stake have also accepted OCBC's offer, and the bank itself has agreed to buy another 7.7 million shares. These agreements amount to 50.66 per cent of Wing Hang's shares in total.
The Singapore lender said it has "sufficient financial resources" to fund the purchase through its own resources and/or bank loans.