Wing Hang May Fall 40% If OCBC Hindered, Credit Suisse Says

Shares of Wing Hang Bank Ltd., a Hong Kong lender being taken over by Oversea-Chinese Banking Corp., could fall as much as 40 percent if OCBC doesn’t garner enough stock to delist the company, Credit Suisse Group AG said.

Under Hong Kong rules, Singapore-based OCBC needs to own at least 90 percent of Wing Hang’s shares to delist the bank, analysts Sanjay Jain and Vineet Thodge wrote in a report today. Failing to win acceptances to take it over that threshold before the takeover offer expires on July 29 means OCBC will have to pare its holdings to 75 percent, the analysts said.

The report came after a regulatory filing showed billionaire Paul Singer’s Elliott Capital Advisors LP had raised its stake in Wing Hang to 7.8 percent. OCBC bid $5 billion for Wing Hang in April, an offer that had been accepted by holders of 50.4 percent of the Hong Kong lender’s shares, the two banks said in a July 4 statement.

“Minority investors might be looking for higher valuations and delay submitting their shares into the tender offer to as late as possible,” Jain and Thodge wrote. “This would make it difficult for OCBC to gauge the potential acceptance level and whether to increase the price or not.”

Wing Hang shares lost 0.6 percent to HK$125.50 as of Hong Kong’s midday trading break. The benchmark Hang Seng Index dropped 0.1 percent. OCBC rose 0.1 percent to S$9.47 in Singapore trading.

Sweeter Deal

Shares of Wing Hang rose 0.5 percent since July 2, when Elliott Capital bought 8.7 million shares at HK$125 ($16), according to a July 3 disclosure posted on the website of Hong Kong’s Securities & Futures Commission. The price matched the per-share amount offered by OCBC on April 1.

“One reason to buy in at this point would be to put pressure on OCBC to sweeten the deal” for minority investors, Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., wrote in a note to clients today.

Shareholders including the family of Wing Hang’s Chairman Patrick Fung and Bank of New York Mellon Corp. had accepted the bid, OCBC said in April.

The Singaporean bank will keep Wing Hang’s shares listed if it can’t buy at least 90 percent of it, Chief Financial Officer Darren Tan said yesterday in response to questions on Elliott Capital’s stake. With the start of the general offer to Wing Hang’s investors, it’s too early to comment on possible outcomes, he said.

Biggest Takeover

“OCBC has time on its side,” Antos wrote. While the lender can retain the Wing Hang listing indefinitely, minority shareholders may not be willing to hold on to their stakes because trading in the stock will be thin once the general offer is completed, he said.

The acquisition would give OCBC more access to China-related business in a city that is the biggest center for offshore yuan trading. The bid is the largest takeover of a Hong Kong bank since DBS Group Holdings Ltd., OCBC’s biggest competitor in Singapore, offered $5.4 billion for Dao Heng Bank Group Ltd. in April 2001.

Connie Leung, a Hong Kong-based spokeswoman for Wing Hang, didn’t immediately respond to an e-mail seeking comment.

(An earlier version of this story corrected the spelling of an analyst name in the second paragraph.)

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