China Brokerage Citic Completes CLSA Deal Minus Taiwan Business

Citic Securities Co. (6030), China’s largest broker by market value, completed its purchase of Credit Agricole SA (ACA)’s CLSA unit, withholding $100 million of the $1.25 billion price pending its acquisition of the Taiwan operation.

Citic is paying $841.7 million for the 80.1 percent of CLSA that it doesn’t already own, and will pay about $100 million more if it wins regulatory approval and buys the Taiwan business in the next three years, the Beijing-based buyer said in a statement to the Hong Kong stock exchange. The change won’t have a material impact on CLSA’s operations, Citic said.

Citic Securities had said the deal will boost the share of revenue from overseas operations to 20 percent, up from the 5 percent that it gets now primarily from its Hong Kong unit. The brokerage, founded in 1995, is controlled by government-owned Citic Group Corp., which holds a 23 percent stake.

The parent company was established in 1979 by Rong Yiren -- who went on to become a vice president of China -- to support former leader Deng Xiaoping’s experiment with open markets. Its businesses now span banking to real estate and oil exploration, and the group reports directly to China’s cabinet.

Citic completed the $310.3 million purchase of 19.9 percent of CLSA last year.

Taiwanese law prohibits Chinese brokerages from owning more than 15 percent of an unlisted broker on the island, which has been governed separately from the mainland since a civil war that ended in 1949.

If Citic wins approval to buy the Taiwan operation, the final price will depend on the unit’s net book value.

To contact Bloomberg News staff for this story: Aipeng Soo in Beijing at asoo4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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