HSBC has put forward a conditional proposal to acquire the remaining shares of Hong Kong-based Hang Seng Bank, seeking to increase its ownership stake from approximately 63% to 100%. The offer is valued at HKD 106 billion (approximately $13.6 billion).
Under the proposed scheme of arrangement, HSBC Asia Pacific would pay HKD 155 for each outstanding share in Hang Seng Bank. This offer represents a 33% premium over the undisturbed 30-day average closing price recorded on October 9. The final offer values Hang Seng Bank at HKD 290 billion (approximately $37.2 billion) on an equity value basis. If the proposal gains approval, Hang Seng Bank, which has been publicly traded on the Hong Kong Stock Exchange since 1972, would become a wholly-owned subsidiary of HSBC Asia Pacific and subsequently delist.
HSBC initially acquired a 51% controlling stake in Hang Seng Bank in 1965 and has gradually expanded its ownership since then. According to a statement from HSBC, the move aligns with its strategic priority to grow its business in Hong Kong while becoming more streamlined and agile. The group anticipates that the acquisition would “unlock opportunities for further investment and improvements in operational leverage.” The statement also noted that Hang Seng’s existing customers would continue to access its products and services, while also gaining broader access to HSBC’s global network and full product suite.
Georges Elhedery, Group CEO of HSBC, commented on the proposal, stating, “We will preserve Hang Seng’s brand, heritage, distinct customer proposition and a branch network, while investing to unlock new strengths in products, services, and technology to deliver more choice and innovation for customers.” Elhedery added that the proposal “fully meets our criteria for value-accretive investments: it aligns with our strategy, enhances growth and scale, does not distract us from organic growth, and delivers greater shareholder value than buybacks.”
This proposal is consistent with HSBC’s recent strategy of streamlining its international operations. In recent years, this strategy has led to divestments of operations in Canada, France, Uruguay, Germany, and Bahrain. HSBC also announced plans recently to offload its retail business in Sri Lanka to Nations Trust Bank.
