Source: Sharecast
HSBC, which owns around 63.3% of Hang Seng Bank, said on Thursday that it had offered HK$155 a share for the shares it does not already own. This is a premium of about 30% to the last closing price.
Shares in the bank tumbled as investors reacted to news it would suspend buybacks for three quarters to preserve capital.
Jefferies said the it was "not enamoured" with the terms on which HSBC is taking HSB private and wonders if there are better ways to deploy $13.7bn inorganically.
"On our numbers, the transaction is EPS-neutral before synergies (we would expect these to be fairly limited in a group context) given a three quarter buyback curtailment," it said.
"On our revised estimates and price target (both higher) and despite 2027E return on tangible equity near 17%, we do not see enough upside potential to justify a buy."
HSBC has a 1,120p price target on the stock.