05.10.2001
CDIB efforts to acquire Grand Cathay come to an end

• Today is the final deadline for China Development & Industrial Bank (CDIB, 2804 'Kai Fa') to acquire Grand Cathay Securities Co. (6003 'Da Hua Zheng'). CDIB had planned to acquire 100 million shares of Grand Cathay on the open market at a price of NT$20. Yesterday, CDIB's chairman indicated the bank still has not secured sufficient shares to complete the acquisition. It is currently holding around 50m shares, according to local newspaper reports.

• In order to impede CDIB's takeover bid, the KMT has also purchased more than 50m shares through several securities companies including Grand Cathay itself, bringing the share price near the NT$20 level. The last hope for CDIB's attempt is for one of Grand Cathay's major shareholders, Kin-Hwa Investment Co. (unlisted), which holds nearly 300 million shares, to release its holdings to the open market.

• VB Primasia Investment Opinion: Grand Cathay is a politically linked securities company which provides quality services, especially in bond dealing. Although CDIB may not be able to secure a controlling share, we believe substantial holdings in the firm will still benefit the bank. However, we are NEUTRAL on the stock’s near-term prospects.

WilliamFong@Primasia.com +886-[0]2-2547-8864