HSBC plans to acquire Hang Seng Bank in a deal worth more than $37 billion. The deal follows a deal to take Hang Seng Bank private after the bank’s majority-owned subsidiary faced performance pressures and exposure to the downturn in Hang Seng Bank and mainland China’s real estate markets.
The acquisition price is HK$155 per scheme share, valuing Hang Seng Bank at approximately HK$106.1 billion ($13.63 billion) in a deal to acquire the 36.5% stake it does not already own, giving Hang Seng Bank a total valuation of $37 billion. The offer represents a 33% premium to Hang Seng’s 30-day average closing price of HK$116.5 per share, resulting in a price-to-book multiple of 1.8x based on first-half 2025 results.
HSBC will maintain Hang Seng’s operating structure
According to announcementHang Seng shareholders will have the opportunity to receive immediate cash at a price that exceeds the lender’s highest share price in three years. Minority investors can also benefit directly from their HSBC capital investment without having to wait for future dividends.
H.S.B.C. The lender’s acquisition plan is aimed at strengthening its local franchise while supporting widespread confidence in Hong Kong’s financial system. Hang Seng Bank reiterated that Hong Kong remains a key market in Asia and a central hub of growth for the entire Asia-Pacific region.
Under the agreement, Hang Seng’s independent identity, including its culture and operational structure, will be maintained. HSBC is committed to ensuring customers that existing products and services remain available and maintaining the bank’s brand, while providing expanded access to HSBC’s global network and product suite. The lender will continue to function as a licensed bank with its own governance, customer proposition and branch network.
“This is a medium- to long-term investment in Hong Kong’s leading regional bank, an iconic franchise, a clear and unique customer proposition, and a strong financial base with very good liquidity and capital ratios.”
-George Elheder, HSBC Group CEO
Mr. Elhederi said the bank would suspend HSBC share buybacks for about three-quarters of a year to increase the capital needed to buy back HSBC’s shares. acquisition.
Michael McDad, Senior Equity Analyst morning starsaid the move was positive and long overdue, as dual listing of parent and subsidiary companies is inherently problematic from a governance perspective. He added that HSBC would have to pay a premium, but there should be potential for cost synergies.
Hang Seng stock soars more than 26% today
Hansen’s Fast Half Financials result It revealed that non-performing loans amounted to 6.69% of total customer loans and advances. The bank cited continued pressure in the real estate sector, up from 6.12% as of December 31, 2024. Bank stocks are rising. jumped off It gained more than 26% today, with a daily price range of $136.80 to $168.00. HSBC Holdings PLC, which is listed on the New York Stock Exchange, also rose 1.12% today to trade at $71.50 following the announcement of its acquisition plans in Hong Kong.
The acquisition will be financed through HSBC’s resources, excluding external funding. The bank said it expects a negative hit of at least 125 basis points on the first day after shareholder approval. The company also aims to restore its Common Equity Tier 1 (CET1) capital ratio to its target range of 14.0% to 14.5% through organic capital generation, while suspending stock buybacks for the three quarters following the announcement. Hang Seng said it intends to maintain a dividend payout ratio of 50% in 2025, excluding important one-time items.
eland revealed In an interview with Reuters, he said the two banks had been in touch about Hang Seng Bank’s commercial real estate exposure and said the deal did not represent a bailout.
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