Singapore’s OCBC offers $1 bln to fully take over insurer Great Eastern

Investing.com-- Oversea-Chinese Banking Corp (SGX:OCBC) on Friday offered to buy the remaining 11.56% stake in Great Eastern Holdings Ltd (SGX:GELA) that it did not currently own, bringing the insurer completely under its fold and delisting the company.

OCBC said it was offering S$1.4 billion ($1 billion), or S$25.60 for each share of Great Eastern. The offer represents a nearly 37% premium to the insurer’s last close.

OCBC plans to delist Great Eastern from the SGX after the completion of the deal.

The move comes after OCBC became a majority shareholder in Great Eastern more than 20 years ago. OCBC said the takeover was to further increase its synergies with the company, which is Southeast Asia’s biggest insurer by assets and market capital. 

The deal is set to be earnings accretive to OCBC, the bank said. Great Eastern has contributed approximately 15% to the bank’s net profit over the past 10 years. 

“As OCBC has been the majority shareholder of Great Eastern for the past 20 years, the Group has entrenched institutional knowledge and expertise to manage the insurance business. We are confident this exercise complements our One Group, One Brand strategy,” OCBC CEO Helen Wong said in an announcement released to the Singapore Exchange (OTC:SPXCY). 

The offer comes shortly after OCBC clocked a 5% increase in its first-quarter profit, to S$1.98 billion. The figure beat Bloomberg estimates of S$1.85 billion, as the bank continued to benefit from high lending rates across its biggest markets.