SINGAPORE: Singapore’s second-biggest lender, OCBC, unveiled a S$1.4 billion (US$1.04 billion) offer on Friday (May 10) to buy the remaining stake in insurer Great Eastern Holdings and delist the company.
OCBC, Great Eastern’s biggest shareholder, said it would acquire the 11.56 per cent stake in the insurer that it does not currently own. If it goes through, the deal will give the lender full ownership of the firm.
The offer price of S$25.60 per share, a premium of 37 per cent, values Great Eastern at S$12.12 billion.
OCBC said it intends to delist Great Eastern from Singapore markets after acquiring it.
The move is aimed at strengthening its business pillars of banking, wealth management and insurance, said OCBC.
“In a fast-growing region that has seen rising demand for products and solutions to enhance and preserve wealth, bringing Great Eastern even closer to OCBC reinforces its long-term vision of becoming the leading wealth management player,” it added.
Great Eastern contributed an average of about S$700 million annually in net profit to OCBC over the past 10 years, which translates to an average of about 15 per cent of OCBC’s annual net profit over this period.
OCBC has been the majority shareholder of Great Eastern for the past 20 years.
It previously made an offer to increase its investment in the insurer in 2004 and 2006.
Great Eastern could not be reached immediately for comments on the proposed acquisition. The company requested a trading halt of shares immediately after OCBC’s announcement.
“The offer is a natural progression of OCBC’s strategy,” OCBC CEO Helen Wong said in a statement.
“We have been looking at opportunities to best use our capital and believe the offer allows us to deploy our resources into a key business that is expected to be earnings accretive to OCBC.”
