Oversea-Chinese Banking Corp.’s final attempt to fully control Great Eastern Holdings Ltd. with its S$900 million ($704 million) bid will be tested on Tuesday, capping a two-decade quest by Singapore’s second-largest lender to take over the insurer.
OCBC is just 6.28% shy of complete ownership, and Great Eastern’s minority shareholders will vote at an extraordinary general meeting whether to delist the 117-year-old firm with an improved bid from the bank. If rejected, OCBC’s so-called ‘exit offer’ will lapse, paving the way for the insurer’s shares to resume trading.
“The transaction is to streamline the group structure and we also think it opens up the potential to manage group capital more efficiently,” said Jayden Vantarakis, head of equity research for Southeast Asia at Macquarie Capital. Still, a full takeover would have a minimal impact on earnings or strategy as OCBC is already in control, he said.
Great Eastern’s independent directors have advised shareholders to accept OCBC’s bid, which has been described by the firm’s financial adviser EY as “fair and reasonable.”
The insurer has contributed an average of about S$700 million a year in net profit to OCBC over the past 10 years, translating to an average of about 15% of OCBC’s annual net profit over this period, the bank has said.
