By Mia Lamar 

HONG KONG-- Bank of East Asia Ltd. has pushed forward with a nearly US$1 billion share sale to Japan's Sumitomo Mitsui Banking Corp. despite a brewing battle with U.S. activist hedge-fund manager Elliott Management Corp.

The bank, one of the last in Hong Kong still under family control, late Wednesday said it had agreed to place 222.6 million shares with Sumitomo Mitsui for 29.56 Hong Kong dollars a share, netting HK$6.6 billion (US$848 million).

The price marks a 0.5% premium to the stock's closing price on Wednesday and an 11% discount to its closing price on Sept. 5, before initial details of the planned share sale to Sumitomo were released.

"The directors believe that the subscription represents a good opportunity for the bank to further broaden the bank's capital base and strengthen its capital position, which would effectively support business development initiatives," Bank of East Asia said in a statement Wednesday.

Elliott has been seeking to stall the deal and took the Hong Kong bank and chairman David Li to court last month in an effort to obtain information on how it was reached. Elliott privately questioned Bank of East Asia's need to raise additional capital, according to statements made in court by one of its lawyers, and suggested it is abusing a mandate to issue additional shares.

The $25 billion hedge-fund manager also revealed it had amassed a roughly HK$1.8 billion (US$232 million), or 2.5%, stake in the bank. Bank of East Asia has a market capitalization of HK$69.04 billion (US$8.9 billion), according to FactSet.

Well-known for waging heated boardroom battles around the world, Elliott is unlikely to go away quietly despite the bank pushing forward with the sale.

"We note the BEA announcement. There is a discovery action ongoing in the Hong Kong courts, which will take its course. We have no further comment," an Elliott spokesman said late Wednesday.

The deal still needs approval from the Hong Kong Stock Exchange's listing committee, according to the announcement. No further shareholder approval is required.

Hedge-fund managers face stiffer odds taking on companies in Asia, where aggressive activism can be received coolly by shareholders and many companies are tightly controlled, in some instances by a single family.

Bank of East Asia was founded by Mr. Li's family in 1918 and is one of the last remaining family-controlled Hong Kong banks. While others have sold to foreign buyers, Bank of East Asia has asserted it is only willing to sell for a sizable premium.

It has several large shareholders, including Sumitomo, Spain's CaixaBank SA and Guoco Group Ltd., a conglomerate controlled by Malaysian tycoon Quek Leng Chan.

Sumitomo's agreement with Bank of East Asia, and its issuance of new shares, raises the Japanese lender's stake to 17.5% from 9.7%, surpassing CaixaBank as the bank's biggest shareholder. CaixaBank, which has agreed to vote with the board on most matters, sees its stake fall to about 16%.

Members of the Li family together now control a roughly 8% stake.

Write to Mia Lamar at mia.lamar@wsj.com

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