Singapore-based OCBC plans to sell stock later to help repay the short-term loan, said the people, who asked not to be identified because the discussions are private. Talks between the companies are centering around a valuation of almost 1.9 times Wing Hang’s book value, though no terms have been finalized, one person said.
At that valuation, OCBC would pay almost HK$39 billion ($6.3 billion) for Wing Hang based on the Hong Kong family lender’s book value as of June 30, data compiled by Bloomberg show. OCBC said Jan. 6 it was in exclusive talks with Wing Hang’s biggest shareholders to buy the bank in what would be its largest acquisition.
Spokesmen at Bank of America, HSBC, Wing Hang and OCBC declined to comment.
OCBC shares on Jan. 9 fell to the lowest in almost a year on concern it would overpay for Wing Hang. Larger Singaporean competitor DBS Group Holdings in 2001 bought Hong Kong’s Dao Heng Bank for US$5.4 billion ($6.8 billion), an acquisition that cost it at least $2.1 billion in writedowns.
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