HSBC Holdings Plc plans to take Hang Seng Bank Ltd. private in a deal that values the lender at $37 billion, ramping up its exposure to Hong Kong as the financial hub attempts to bounce back from years of economic turbulence.
The price was set at HK$155 ($19.92) a share in cash, a premium of about 30% over the last closing price, HSBC said in a statement on Thursday. The publicly listed shares would be canceled under the proposal.
“The proposal represents a significant investment into Hong Kong, which underlines our confidence in the growth potential for both HSBC Asia-Pacific and Hang Seng,” HSBC said. “The proposal will unlock opportunities for further investment and improvements in operational leverage.”
HSBC, based in London, currently owns about 63% of Hang Seng Bank and will spend about $14 billion buying up the shares it doesn’t already hold. The lender plans to refrain from share buybacks in the coming three quarters as it seeks to restore its capital ratio to its operating range.
The move to purchase the rest of Hang Seng Bank “delivers greater shareholder value than buybacks,” Chief Executive Officer Georges Elhedery said in the statement.
