Cathay Clears Last Hurdle to Acquire Great Eastern

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Cathay General Bancorp scaled the last hurdle Monday in acquiring New York-based Great Eastern Bank after winning approval from state regulators to buy 100 percent of the bank’s stock.


For several months, Los Angeles-based Cathay has been in stiff competition with rival UCBH Holdings Inc. in San Francisco to acquire the five-branch community bank in New York. Cathay won approval last week from the Federal Reserve to acquire Great Eastern.


In October, Cathay exercised options to buy 41 percent of Great Eastern’s outstanding shares from dissident shareholders. It is offering $65 a share for the bank, roughly $5 per share higher than UCBH’s bid of $103.6 million.


Analysts say the most likely scenario is that Great Eastern will put the UCBH offer to a shareholder vote but it will not get the required two-thirds approval, since Cathay General is expected to block the bid.


At that point, Great Eastern would have to pay UCBH a $4.5 million break-up fee, paving the way for Cathay to conduct its own due diligence for a merger.


However, analysts are far from certain whether Cathay will prevail because management of Cathay and Great Eastern have not negotiated a deal.

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