By Mia Lamar
HONG KONG-- Bank of East Asia Ltd. has pushed forward with a
nearly US$1 billion share sale to Japan's Sumitomo Mitsui Banking
Corp. despite a brewing battle with U.S. activist hedge-fund
manager Elliott Management Corp.
The bank, one of the last in Hong Kong still under family
control, late Wednesday said it had agreed to place 222.6 million
shares with Sumitomo Mitsui for 29.56 Hong Kong dollars a share,
netting HK$6.6 billion (US$848 million).
The price marks a 0.5% premium to the stock's closing price on
Wednesday and an 11% discount to its closing price on Sept. 5,
before initial details of the planned share sale to Sumitomo were
released.
"The directors believe that the subscription represents a good
opportunity for the bank to further broaden the bank's capital base
and strengthen its capital position, which would effectively
support business development initiatives," Bank of East Asia said
in a statement Wednesday.
Elliott has been seeking to stall the deal and took the Hong
Kong bank and chairman David Li to court last month in an effort to
obtain information on how it was reached. Elliott privately
questioned Bank of East Asia's need to raise additional capital,
according to statements made in court by one of its lawyers, and
suggested it is abusing a mandate to issue additional shares.
The $25 billion hedge-fund manager also revealed it had amassed
a roughly HK$1.8 billion (US$232 million), or 2.5%, stake in the
bank. Bank of East Asia has a market capitalization of HK$69.04
billion (US$8.9 billion), according to FactSet.
Well-known for waging heated boardroom battles around the world,
Elliott is unlikely to go away quietly despite the bank pushing
forward with the sale.
"We note the BEA announcement. There is a discovery action
ongoing in the Hong Kong courts, which will take its course. We
have no further comment," an Elliott spokesman said late
Wednesday.
The deal still needs approval from the Hong Kong Stock
Exchange's listing committee, according to the announcement. No
further shareholder approval is required.
Hedge-fund managers face stiffer odds taking on companies in
Asia, where aggressive activism can be received coolly by
shareholders and many companies are tightly controlled, in some
instances by a single family.
Bank of East Asia was founded by Mr. Li's family in 1918 and is
one of the last remaining family-controlled Hong Kong banks. While
others have sold to foreign buyers, Bank of East Asia has asserted
it is only willing to sell for a sizable premium.
It has several large shareholders, including Sumitomo, Spain's
CaixaBank SA and Guoco Group Ltd., a conglomerate controlled by
Malaysian tycoon Quek Leng Chan.
Sumitomo's agreement with Bank of East Asia, and its issuance of
new shares, raises the Japanese lender's stake to 17.5% from 9.7%,
surpassing CaixaBank as the bank's biggest shareholder. CaixaBank,
which has agreed to vote with the board on most matters, sees its
stake fall to about 16%.
Members of the Li family together now control a roughly 8%
stake.
Write to Mia Lamar at mia.lamar@wsj.com
Access Investor Kit for CaixaBank SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=ES0140609019
Access Investor Kit for Bank of East Asia Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=HK0023000190
Access Investor Kit for Sumitomo Mitsui Financial Group,
Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3890350006
Access Investor Kit for Bank of East Asia Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0618741039
Access Investor Kit for CaixaBank SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US12803K1097
Access Investor Kit for Sumitomo Mitsui Financial Group,
Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US86562M2098
Subscribe to WSJ: http://online.wsj.com?mod=djnwires