China Mobile's Acquisition of a 20Pct Stake in SPDB Approved

Submitted by BOCVIP on Thu, 08/26/2010 - 08:42

China Mobile's acquisition of a 20 percent stake in Shanghai Pudong Development Bank for 39.8 billion yuan got preliminary approval from China Securities Regulation Commission.

Shanghai Pudong Development Bank (600000.SH)'s plan to sell a 20
percent-stake to China Mobile was approved by China Securities Regulation
Commission with conditions, it said in a statement without elaborating.

An earlier statement said the bank’s private placement had been approved on
March 30 in the general meeting of shareholders. According to the proposal,
Shanghai Pudong Development Bank will sell 2.208 billion A-shares to Gungdong
subsidiary of China Mobile at a price of 18.03 yuan per share, raising 39.8
bililon yuan.

Under completion of the deal, Gungdong Mobile will acquire a 20 percent stake
in the bank, moving up to the second-largest shareholder after Shanghai
International Group, who currently holds 24.32 percent stake in the bank.

It is a win-win deal, according to Zhou Jun, an analyst with Huatai United
Securities. The deal will help supplement working capital in the cash-strapped
bank and at the same time, provide China Mobile with opportunities to expand its
electronic payment business, Zhou said.

The Shanghai-based lender said in its first quarter results that its capital
adequacy ratio was 10.16 percent and core capital adequacy ratio was 6.86
percent. Net profit attributable to shareholders was 4.11 billion yuan for the
first quater, an increase of 38.7 percent compared with the same period of last
year.

The private placement is expected to add 3.5 percentage points to the bank’s
capital adequacy ratio that can support three years’ expansion.

Wang Jianzhou, President of China Mobile, said on Aug. 19 China Mobile’s
buying of SPDB’s shares had been approved by State-owned Asset Supervision and
Administration Commission and China Banking Regulatory Commission
respectively.

Formal approval from the country’s securities regulator will be noticed
further, the statement said.

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