HSBC Holdings recently issued a significant announcement, proposing to privatize Hang Seng Bank at a price of HKD 155 per share. This move has garnered widespread attention in the financial markets. The plan not only offers Hang Seng Bank shareholders an attractive exit opportunity but also marks HSBC Group’s further integration of its banking operations in Hong Kong.

According to the announcement, the privatization offer represents a premium of approximately 30.3% over Hang Seng Bank’s closing price on the last trading day before the announcement and is also 18.3% higher than the highest target price set by market analysts. For shareholders, the offer includes a cash consideration of HKD 155 per share, with HSBC Asia expected to pay a total of approximately HKD 106.156 billion. Notably, shareholders will also receive the third interim dividend for 2025, which will not be deducted from the plan consideration.

HSBC Holdings emphasized that this privatization not only reflects the current market value of Hang Seng Bank but also underscores its business development potential over the next few years. Financially, HSBC Asia will utilize internal group resources to cover the entire consideration and has received confirmation from BofA Securities and Goldman Sachs regarding its sufficient financial strength. From HSBC Group’s perspective, the plan is expected to boost earnings per ordinary share by eliminating the profit deduction for Hang Seng Bank’s non-controlling interests.

In terms of corporate governance, HSBC Holdings committed to respecting Hang Seng Bank’s unique position. Although Hang Seng Bank will become a wholly-owned subsidiary of HSBC Holdings, it will retain its independent licensed banking status, corporate governance, brand image, market positioning, and branch network. This means that the two brands will continue to serve the Hong Kong market side by side, offering a diverse range of banking services.

The market reacted positively to the news. As of the morning of the announcement, Hang Seng Bank’s share price had risen by 26.39% to HKD 150.4. Related stocks such as HSNGF also rose by 8.60%, indicating that investors have a positive attitude toward this merger and acquisition plan.

From a regulatory standpoint, this transaction is considered a reportable transaction under the Hong Kong Listing Rules and is expected to be a fully exempted connected transaction. Upon completion of the privatization, Hang Seng Bank will be delisted from the Hong Kong Stock Exchange and become a wholly-owned subsidiary of HSBC Holdings.

Notably, HSBC has clearly stated that it will not raise the privatization offer and expects the CET1 capital ratio to be impacted by approximately 125 basis points upon completion of the privatization. Additionally, HSBC will maintain its 2025 target payout ratio, which is 50% of earnings per ordinary share (excluding significant items).

This acquisition plan is a crucial step in HSBC Group’s strategic layout and provides an attractive investment exit opportunity for Hang Seng Bank shareholders. By integrating resources, HSBC aims to further enhance its competitiveness and profitability in the Hong Kong banking market.