Citic will acquire 6% of the US entity
US bank Bear Stearns and Chinese bank CITIC Securities have reached an agreement in principle to establish a strategic alliance that includes a mutual investment of around one billion dollars, the entities reported today.
The preliminary agreement stipulates that the Chinese bank would acquire around 6 percent of the stake in the US firm, which could increase to 9,9 percent in the future, and Bear Stearns would seek approval from Chinese authorities to acquire a similar stake, the entities explained in a press release.
With this alliance, which has been unanimously approved by the respective boards of directors, the entities intend to develop new financial products and business opportunities in China, for which they plan to combine the activities they currently carry out in other Asian countries.
The alliance will combine Bear Stearns' experience in global capital markets with CITIC's extensive resources and broad business network, the companies emphasized.
The strategic agreement also includes the formation of a joint venture based in Hong Kong to offer financial services in the Asian region, in which each will have a 50 percent stake.
With this alliance, the entities intend to serve international companies seeking access to Asian capital markets, as well as Chinese entrepreneurs, corporations, and public companies seeking access to financing or investment outside of that region.
James Cayne, president and CEO of Bear Stearns, emphasized that this strategic collaboration will give his company a unique position in one of the world's fastest-growing economies.
"We are confident that combining our operations in Asia with CITIC will benefit Bear Stearns' global customer base and generate substantial new revenue and long-term growth opportunities," Cayne emphasized.
The final conclusion of the agreement depends on the negotiation of some specific aspects, their approval by the respective boards of directors, and the approval of the regulatory authorities in both countries.
Both companies cautioned that there can be no guarantees that the negotiations will conclude successfully or that the transactions will be completed.
Citic Group is the largest shareholder in CITIC Securities and one of the largest state-owned financial conglomerates in China.
Bear Stearns shares were up about 0,5 percent by midday on the New York Stock Exchange and were trading at $117,07 per share, 66 cents higher than on Friday.
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