Trading of the shares of Chong Hing Bank was suspended after three people confirmed that the bank is nearing the finalization of an agreement to be bought out by the Yue Xie Group. This announcement may be done as early as next week, according to sources who sought not to be identified as the discussions are confidential in nature.
Chong Hing shares had increased by 7% to a record HKD37.40 resulting in an enterprise value of HKD16.3 billion or USD2.1 billion. The bank's parent firm, Liu Chong Hing Investment Ltd also was asked to halt trading of its shares on the bourse.
This would be the first acquisition of a Hong Kong financial institution by a mainland China firm. Yue Xie is the trading arm of the Guangzhou city government. With the 53 branches of the bank, the bank would be able to provide overseas financing for Chinese companies.
The shares of the bank and the parent firm have been temporarily suspended pending an announcement of a merger or takeover. For its part, Liu Chong Hing Investment share prices rose by 5.5% to HKD19.88 yesterday.
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