Acquisition of Republic New York & Safra Republic
HSBC Holdings PLC
8 November 1999
HSBC PLANS TO PROCEED WITH ACQUISITIONS OF
REPUBLIC NEW YORK CORPORATION AND
SAFRA REPUBLIC HOLDINGS S.A.
HSBC Holdings plc ('HSBC'), Republic New York Corporation
('RNYC') and Safra Republic Holdings S.A. ('SRH') and Mr
Edmond J Safra ('Mr Safra') have reached agreement to
proceed to complete the proposed acquisitions of RNYC and
SRH by HSBC. Depending on regulatory approvals and RNYC
shareholder approval being obtained and the fulfilment of
other conditions, closing is targeted to take place
by year end. It is expected that supplemental proxy
materials will be mailed to RNYC stockholders later this
week in connection with the adjourned RNYC stockholders
meeting scheduled for 30 November 1999 to consider the
transaction.
Under the agreement, Mr Safra personally will accept a
reduction of USD450 million in the aggregate amount he
will receive for his shareholding in RNYC. (Mr Safra
holds, through corporate interests, shares representing
29 per cent and 21 per cent of the issued share capital
of RNYC and SRH respectively.) For other shareholders the
financial terms of the acquisitions remain unaltered at
USD72 per share for each of RNYC and SRH. Mr Safra has
also confirmed his full support for the integration of
RNYC and SRH into the HSBC Group and has undertaken to
assist personally in ensuring a smooth transition for
existing clients and in the establishment of a new,
international private banking brand to be named HSBC
Republic.
Mr Safra, commenting on the unprecedented act of
personally accepting USD450 million less for his interest
in RNYC, said: 'I am taking this action because I believe
that a swift completion of the transaction will be to the
benefit of Republic's clients, shareholders and employees
to whom my life's work has been devoted.'
Arrangements have also been agreed between
HSBC and Mr Safra, the effect of which is that, should
certain potential liabilities arising from the Princeton
Note situation result in losses to RNYC that exceed an
agreed amount, Mr Safra would bear up to USD180 million
of such excess losses.
Mr Safra added: 'Both Republic and HSBC have always acted
to maintain the highest reputations for their
institutions. This is just one more example of the
character of both organisations. I am excited for our
clients and employees who, after this transaction, will
have access to all the resources of one of the strongest
financial institutions in the world. Not only will I
become a major client of HSBC, but I also intend to take
an active role in ensuring a smooth transition for all
our existing clients.'
HSBC Group Chairman, Sir John Bond, said: 'I am pleased
that, after a period of uncertainty, we have found a way
forward. We have the greatest admiration for Edmond Safra
taking personal action which embodies the spirit and
integrity of Edmond and the franchise he has built.
'When we announced our intention to acquire RNYC and SRH
in May this year we described the benefits to HSBC
customers and shareholders of effectively doubling our
international private banking business and extending
significantly our US domestic personal and commercial
banking business. The alleged irregularities which have
delayed closing the acquisition occurred in a division of
a securities subsidiary which was unrelated to the core
businesses of RNYC and SRH. The strategic reasons for the
acquisitions going ahead remain compelling.'
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