(Reuters) – China Strategic (0235.HK) will drop one part of its planned deal to buy AIG’s (AIG.N) Taiwan Nan Shan Life unit, in its latest attempt to kickstart a $2.2 billion takeover stymied for almost eight months.
Deals | China
China Strategic CEO Raymond Or told Reuters on Friday that the company will not pursue the sale of a stake in Nan Shan to Taiwan’s Chinatrust (2891.TW), which it had originally planned to do after closing the deal.
Diversified battery maker China Strategic and Hong Kong investment firm Primus Financial agreed to buy Nan Shan in October, but have been unable to seal the deal amid concerns in Taiwan over their political connections with mainland China and their lack of expertise in the insurance business.
“I believe this is not an appropriate time to talk with Chinatrust before we have successfully bought Nan Shan,” Or said.
“Especially as, when we signed the MOU (with Chinatrust), the regulators said this complicated the whole issue.”
Chinatrust, Taiwan’s top credit card firm, had signed an MOU to buy a 30 percent stake in Nan Shan for $660 million from China Strategic, subject to approval of the deal.
Taiwan’s regulators have expressed growing frustration with the buyers, saying that requested information has not been forthcoming. Or has said that the company is trying to comply with ever increasing requests.
China Strategic has already modified the deal twice to try and get it over the line.
It said earlier this month that some $325 million of the purchase price would be put into a fund to support Nan Shan’s capital as a way of soothing concerns over future health of the insurer, which has more than 4 million policyholders or nearly one-fifth of Taiwan’s population.
Two weeks later AIG and the buyers agreed to extend the deadline of the deal by three months.
A Chinatrust spokesman said only that the MOU had expired on Friday, and declined to comment on whether the firm would pursue the deal in future.
China Strategic may still consider selling a stake in Nan Shan after the deal gets a greenlight, Or said.
“Now we are focused on dealing with the regulators on our transaction. Without Chinatrust, it will not affect the deal. There is an advantage if we cooperate with Chinatrust but it is not an issue if we do it alone,” he said.
“After the deal is completed we will have bigger room to do what we want.”
In midday trading, Chinatrust shares rose 1.1 percent, beating the broader market’s 1.6 percent slide.
(Reporting by Alison Leung and Faith Hung; Editing by Jonathan Standing and Jacqueline Wong)