HSBC Holdings PLC has announced plans (proposal) to buy out the remaining 37% shares of Hang Seng Bank Ltd—one of Hong Kong’s leading lenders—in a deal valued at around US$14 billion, marking one of Hong Kong’s largest transactions this year.
The British banking group currently owns about 63% of Hang Seng and aims to buy the remaining shares for HK$155 per share, that's roughly a 30% premium to the bank’s last market closing price before the announcement.
This move highlights HSBC deepening its commitment to Asia and its confidence in Hong Kong’s long-term financial hub despite the fact that there's a sluggish property market and slower growth in the region.
Chief Executive Georges Elhedery said the buyout would simplify HSBC’s structure and strengthen its presence in its biggest market. If completed, the deal would give HSBC 100% control of Hang Seng Bank, allowing it to streamline operations, simplify reporting, and capture more profits from its Asian business.
The buyout adds to what has already been a lively year for dealmaking in Hong Kong, with renewed investor optimism and a rise in major corporate transactions—several large-scale mergers. According to Bloomberg, this HSBC’s bid for Hang Seng Bank pushes this year’s potential volume of deals involving companies in Hong Kong to $74 billion, a roughly 40% jump from the same period a year ago.
Notably, Hang Seng Bank’s shares jumped after the news, but HSBC’s stock dipped as investors weighed the cost of the acquisition and its short-term impact on capital reserves. HSBC’s shares slid 6% in Hong Kong on Thursday and 0.5% Friday. It's also worth noting that the acquisition still requires approval from shareholders and regulators before going ahead.
