Double whammy for Bank of East Asia shareholders

SMFG’s greater presence in the Hong Kong bank makes M&A less likely and dilutes other shareholders.

Shareholders in Bank of East Asia BEA may be disappointed that Japanese megabank SMFG plans to raise its stake to 17.5% as analysts say the move makes a takeover approach even less likely and dilutes existing shareholders.

SMBC, the core lending unit of SMFG, will acquire 222 million new shares in BEA through a private placement, equivalent to 8.7% of the enlarged share capital.

“We believe the growing presence of a large strategic investor reduces the likelihood of any corporate action in the near term,” said Barclays analysts in a research report.

The blow comes at a time of heightened worries about...

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