HSBC Holdings on Thursday announced a proposal to take full ownership of its Hong Kong subsidiary, Hang Seng Bank, in a deal valued at approximately 106.2 billion Hong Kong dollars ($13.6 billion).
The bank's unit, HSBC Asia Pacific, offered to buy the shares it does not already own for HK$155.00 each in cash, a premium of about 30.3% to the last closing price, the company said.
To manage its capital levels following the transaction, HSBC said it would not initiate any new share buybacks for three quarters.
The deal is expected to reduce its core capital ratio by approximately 1.25 percentage points on day one, according to the company.
HSBC said it expects to restore its capital ratio to its target range through a combination of organic capital generation and the temporary halt on buybacks.
The company stated that the move would simplify its Hong Kong operations and that Hang Seng Bank would retain its separate brand and banking license after the privatization.
More from this issuer
Related coverage
HSBC Holdings will take a $1.1 billion provision in its third-quarter results related to long-running litigation stemming from the Bernard Madoff fraud, the company said Sunday.
HSBC Holdings said Wednesday it has issued $1.5 billion in new debt, a move that follows a recent effort to retire older bonds as part of a capital structure overhaul.
HSBC Holdings on Monday announced the pricing for its offer to buy back four series of subordinated notes, part of a move to manage its regulatory capital.
HSBC Holdings on Tuesday launched a cash offer to buy back four series of subordinated notes with a total outstanding principal of about $2.8 billion.