ICBC to pay $10.8bln to take Hong Kong unit private

Move can bring more flexibility to tap its resources as the business continues to develop.

Industrial and Commercial Bank of China Ltd said it would pay shareholders of its Hong Kong arm a 27 percent premium to take it private, as part of an effort to expand its presence there.

Each ICBC (Asia) Ltd shareholder would receive HK$29.45 per share, ICBC said in a proposal posted on the Hong Kong exchange on Tuesday, an exercise that would cost the bank HK$10.8 billion ($1.4 billion).

"While ICBC (Asia) is currently trading at its recent high, we believe further growth of the business may be limited by its status as a listed company in Hong Kong," the banks said in a joint statement.

"After ICBC (Asia) has been privatized, it will have much greater flexibility to take advantage of ICBC's resources as the business continues to develop in the coming years."

Trade on ICBC (Asia) shares will resume on Wednesday after being suspended on July 27, the banks said, adding that the price also represents a 48.7 percent premium over its 90-day running average.

The bank also said that ICBC will not raise the current offer price, and that ICBC (Asia) may have to consider other fundraising methods such as a rights issue if shareholders reject the offer.

View the full story in Reuters.