HSBC Holdings Plc announced today (Oct. 9) a proposal to privatize Hang Seng Bank by way of a scheme of arrangement, with an offer price of HK$155 per share. Hang Seng Bank's last traded price was HK$119, representing a price-to-book ratio of 1.42 times. The privatization offer represents a premium of approximately 30% over this price.
In a joint announcement, HSBC Asia-Pacific, as the offeror, has requested the Board of Hang Seng Bank to submit the proposal to shareholders. If the plan becomes effective, the relevant shares will be canceled. The acquisition is intended to be funded from HSBC Group's internal resources.
The announcement stated that the privatization price implies a price-to-book ratio of 1.8 times for the first half of 2025, significantly higher than the median of 0.4 times for comparable peers in Hong Kong. Furthermore, shareholders will still receive the third interim dividend for this year, which will not be deducted from the plan consideration, but all subsequent dividends will be deducted.
Regarding HSBC's move to privatize Hang Seng Bank, the Hong Kong Monetary Authority (HKMA) responded that it is aware of the plan and has been maintaining communication with the relevant banks, proceeding with the necessary regulatory approvals according to established mechanisms and procedures.
The HKMA stated that it notes HSBC's indication that this transaction represents a significant investment in Hong Kong. Upon completion, The Hongkong and Shanghai Banking Corporation Limited and Hang Seng Bank will continue to operate as two separate authorized institutions. The HKMA will continue to maintain communication with the relevant institutions.
When the market opened today (Oct. 9), Hang Seng Bank's stock price surged, with gains expanding to 26%, reaching HK$150.
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