Shares of Chong Hing Bank fell as trading resumed for the stock after accepting a takeover bid from Yue Xiu Group. The deal was worth USD 1.5 billion. Chong Hing dropped 6.3% to HKD 35.05 in morning trading today. It was the company's largest drop in five weeks. Before trading for the stock was suspended on October 23, Chong Hing was trading at HKD 37.40. Yue Xiu had offered HKD 35.69 a share to get a 75% control of the Hong Kong-based bank.
Absent any merger premium, Maybank Kim Eng Securities Analyst Steven Chan said, "We believe that Chong Hing Bank's share price will return to levels consistent with normal banking operations." He added that the stock could plunge to HKD 18.31.
According to a statement, Chong Hing would be paying dividends of HKD 4.5195 per share to investors who would accept the bid from Yue Xiu. The Hong Kong Monetary Authority would still need to approve the takeover bid of Yue Xiu.
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