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Ping An ready to reject state breakup of Fortis
By John Martens |
February 9, 2009, Monday
|
Print Edition
Print Edition
PING An Insurance (Group) Co, facing a 92-percent fall in the value of its Fortis investment, will reject the state-organized breakup of what was once Belgium's largest financial-services firm.
China's second-biggest insurer will vote against BNP Paribas SA's revised offer for parts of Fortis's banking and insurance units at a ballot on Wednesday, Ping An said yesterday in a statement sent by public relations firm Hill & Knowlton.
"Since September 2008, the decisions to sell assets were driven by the Belgian government and have not only destroyed Fortis's value, but have also severely impaired Fortis shareholders' interests as a whole," Ping An said in the statement. "Such transactions have breached the corporate governance principles of Fortis." The all but completed breakup of Fortis may end in a legal battle should investors reject it at the meeting held in two days. Fortis remains bound by agreements approved by the board and Mischael Modrikamen, the lawyer who won a December 12 court injunction blocking the asset sales, and who has started proceedings before the Brussels Commercial Court seeking to reverse the transactions. Ping An holds more than a fifth of the votes cast, based on turnout at Fortis's shareholders' meetings in December.
"A negative vote would significantly increase the legal risk," Benoit Petrarque, an analyst at Kepler Capital Markets in Amsterdam who recommends buying Fortis, wrote in a note last week. "BNP Paribas and the Belgian state could request that the court force the deal through if Fortis refuses to participate. A negative vote would cancel the improved deal."
By offering better terms, BNP Paribas sought to overcome a court challenge blocking the purchase because it didn't get shareholder approval. Fortis was forced to sell most of its assets over three days last October to avert collapse after running out of short-term funding and seeing its shares plummet.
"Ping An believes that other options should have been, and still can be, explored in order to sustain the operation of the business and optimize value for shareholders," the statement said.
Fortis rose 10.3 cents, or 7.6 percent, to close at 1.453 euros in Brussels trading on Friday, valuing the insurer at 3.42 billion euros (US$4.42 billion).
Ping An, part-owned by HSBC Holdings Plc, held almost 121 million Fortis shares as of September 1, according to a November 5 regulatory filing. That equals 5.1 percent of outstanding shares with voting rights, Bloomberg News reported.
Ping An first disclosed holding a 4.2-percent stake in November 2007 and subsequently increased its interest.
The insurer bought more shares in June 2008 to keep its stake as Fortis raised 1.5 billion euros from a share sale.
China's second-biggest insurer will vote against BNP Paribas SA's revised offer for parts of Fortis's banking and insurance units at a ballot on Wednesday, Ping An said yesterday in a statement sent by public relations firm Hill & Knowlton.
"Since September 2008, the decisions to sell assets were driven by the Belgian government and have not only destroyed Fortis's value, but have also severely impaired Fortis shareholders' interests as a whole," Ping An said in the statement. "Such transactions have breached the corporate governance principles of Fortis." The all but completed breakup of Fortis may end in a legal battle should investors reject it at the meeting held in two days. Fortis remains bound by agreements approved by the board and Mischael Modrikamen, the lawyer who won a December 12 court injunction blocking the asset sales, and who has started proceedings before the Brussels Commercial Court seeking to reverse the transactions. Ping An holds more than a fifth of the votes cast, based on turnout at Fortis's shareholders' meetings in December.
"A negative vote would significantly increase the legal risk," Benoit Petrarque, an analyst at Kepler Capital Markets in Amsterdam who recommends buying Fortis, wrote in a note last week. "BNP Paribas and the Belgian state could request that the court force the deal through if Fortis refuses to participate. A negative vote would cancel the improved deal."
By offering better terms, BNP Paribas sought to overcome a court challenge blocking the purchase because it didn't get shareholder approval. Fortis was forced to sell most of its assets over three days last October to avert collapse after running out of short-term funding and seeing its shares plummet.
"Ping An believes that other options should have been, and still can be, explored in order to sustain the operation of the business and optimize value for shareholders," the statement said.
Fortis rose 10.3 cents, or 7.6 percent, to close at 1.453 euros in Brussels trading on Friday, valuing the insurer at 3.42 billion euros (US$4.42 billion).
Ping An, part-owned by HSBC Holdings Plc, held almost 121 million Fortis shares as of September 1, according to a November 5 regulatory filing. That equals 5.1 percent of outstanding shares with voting rights, Bloomberg News reported.
Ping An first disclosed holding a 4.2-percent stake in November 2007 and subsequently increased its interest.
The insurer bought more shares in June 2008 to keep its stake as Fortis raised 1.5 billion euros from a share sale.
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