Insurance company AIA Group and portfolio investor China Strategic Holdings confirmed Tuesday that they had been named as among the final bidders for the Bank of East Asia's life insurance unit, BEA Life.
The confirmation was made through a filing with the Hong Kong Stock Exchange as talk swirled of the companies being in the final stages of negotiations for the acquisition.
In their filing, the companies clarified that they had submitted a "non-binding indication of interest" for the acquisition of the business unit. The companies said that they had been selected as one of the shortlisted bidders and will proceed with signing a legally binding agreement after it does further due diligence.
AIA Group and China Strategic Holdings said that the bidding process is still ongoing and they may or may not win the bid for BEA Life. The companies said that even if they win the bid, the deal will still be subject to approval from regulators and shareholders.
The companies made their clarifications following the release of reports of their participation in the selling of BAE's life insurance unit.
BEA - a company backed by activist investor Elliot Management, is expected to raise between $500 million and $600 million from the sale of its life insurance business. BEA is expected to announce the outcome of the bidding process as early as this month, sources with knowledge in the matter said.
China Strategic Holdings' share price surged following news of its participation in the bidding Monday. The stock rose by a further 25% on Tuesday in Hong Kong - its largest intraday gain since December 2020.
BEA's stock increased by around 3.6% Tuesday, while AIA Group's stock dropped by as much as 1% during the same day.
BEA initially announced its plans to sell its life insurance unit in September last year. The company said during that time that the sale is meant to boost its profitability and life its shares.
The Hong Kong-listed company said that it plans to enter into a long-term exclusive distribution agreement with the company that ends up acquiring its insurance business. The company aims for the deal to provide it with an ongoing source of revenue through the continued use of its existing insurance platforms.
