05.11.2001
CDIB acquires Grand Cathay by the skin of its teeth

• China Development and Industrial Bank (CDIB, 2804 'Kai Fa Yin') has successfully acquired a major stake of 140m shares in Grand Cathay Securities (6003 'Da Hua Zheng') since 30 April in its bid to takeover the company, equal to 12.1% of total shares. This boosts the bank's overall holdings in Grand Cathay to nearly 20%, making it a major shareholder.

• Up until yesterday's final deadline, CDIB had failed to acquire sufficient shares in the securities company due to the high share price of around NT$20. However, Grand Cathay's major shareholders (KMT) allowed the price to fall to NT$18.1 in yesterday's trading, giving CDIB a last chance to buy in.

• VB Primasia Opinion We believe the KMT, as the major shareholder in Grand Cathay, allowed CDIB to succeed in its share-buying bid in an effort to secure the value of its own substantial holdings. We remain NEUTRAL on CDIB.

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