CMB confirms Wing Lung acquisition

China Merchants Bank (CMB) gave official confirmation on Monday that it will buy a 53.12% stake in Hong Kong lender Wing Lung Bank for US$2.47 billion, the Wall Street Journal reported. The Shenzhen-based operator will pay HK$156.50 (US$20.05) per share for the stake and then make a general offer for all issued shares in Wing Lung, valuing the whole company at US$2.47 billion. This will allow CMB to make Wing Lung a wholly-owned unit. Wing Lung has 35 branches in Hong Kong, three in mainland China and one apiece in Los Angeles and the Cayman Islands. The acquisition price equates to 3.1 times Wing Lung’s book value at the end of the first quarter or 2.9 times its book value at the end of 2007. Although this is higher than the average 1.8 times for recent Hong Kong acquisitions, analysts said the valuation was reasonable given the business potential.