OCBC Makes S$1.4 Billion Bid for Remaining Great Eastern Holdings Stake

OCBC Makes S$1.4 Billion Bid for Remaining Great Eastern Holdings Stake

by May 13, 2024

OCBC Bank announced that it has put up a S$1.4 billion bid to acquire the remaining 11.56% of Great Eastern Holdings Limited it does not own. The bank has been the majority shareholder of Great Eastern for the past 20 years.

The move aims to consolidate OCBC’s strengths in banking, wealth management, and insurance. The proposed acquisition is a part of OCBC’s strategic efforts to enhance its presence in Asia’s wealth management sector.

The offer price of S$25.60 per share is substantially higher than Great Eastern’s last closing price, marking a premium of up to 42.4% over various periods.

This acquisition could potentially lead to the delisting of Great Eastern from the Singapore Exchange Securities Trading (SGX-ST).

Helen Wong

Helen Wong

Helen Wong, Group CEO of OCBC said,

“The offer is a natural progression of OCBC’s strategy. We have moved intentionally to build up a strong wealth management franchise by hiring the best people and instituting best practices and processes, and raising our investment in Great Eastern.”

OCBC’s initiative is rooted in a strategy formulated in 2022 designed to leverage regional trade, investment, and wealth.

This strategic move also complements the company’s established hubs in Singapore, Hong Kong, and Dubai and is supported by its digital offerings.

The acquisition is anticipated to be earnings accretive, with Great Eastern historically contributing an average of about S$700 million annually to OCBC’s net profits over the past decade. This represents roughly 15% of OCBC’s yearly earnings.

Wong further noted that this isn’t the first instance of OCBC seeking to increase its stake in Great Eastern, with previous offers made in 2004 and 2006. The company believes this step will strengthen integration across its operations.

J.P. Morgan Securities Asia Private Limited is serving as the exclusive financial advisor to OCBC for this transaction, while Allen & Gledhill LLP is providing legal counsel.