The HSBC share price isn’t having a good day, but I don’t think shareholders should be alarmed
By midday today (9 October), the HSBC (HSBA.L) share price was approximately 5% lower after the FTSE 100’s (^FTSE) second-largest company announced plans to buy out the minority shareholders in Hang Seng Bank (0011.HK). It already owns 63.5% of the financial institution, which is listed on the Hong Kong Stock Exchange.
HSBC is offering to pay 30% more than the pre-announcement share price. This means the deal’s likely to cost $13.6bn. To help pay for this, it’s going to suspend its share repurchases for the next three quarters.
The purchase price definitely appears expensive to me. It’s equivalent to 1.8 times the book value of Hang Seng Bank. For comparison, HSBC currently has a…
