Singapore-based DBS Group Holdings Ltd. (DBSDF.PK,DBSDY.PK) said Sunday that it has agreed to acquire PT Bank Danamon Indonesia Tbk for S$9.1 billion, or $7.3 billion, in cash and stock.
The acquisition will enable DBS, Southeast Asia's biggest bank, to boost its presence in Indonesia and propel it into being one of the top five lenders in the country.
As a first step, DBS said in a statement to the Singapore Stock Exchange that it has entered into a conditional share purchase agreement with Fullerton Financial Holdings Pte. Ltd. to acquire its subsidiary Asia Financial (Indonesia) Pte. Ltd. or AFI for S$6.2 billion. AFI holds a 67.37 percent stake in Danamon.
Fullerton Financial or FFH is a wholly-owned unit of Singapore state investment firm Temasek Holdings, while DBS is also owned 29 percent by Temasek. DBS said it will pay the consideration for AFI in the form of 439 million new DBS shares at an issue price of S$14.072 per share.
On completion of the AFI acquisition, DBS will launch a mandatory tender offer to acquire the remaining listed shares of Danamon from other shareholders for 7,000 Indonesian Rupiah or IDR per Danamon share in cash. The offer price represents a 52 percent premium over Danamon's closing stock price on Friday of IDR4,600.
Of the total acquisition value, about S$6.2 billion will be paid to FFH in the form of new shares and the remainder will be paid to the other shareholders in cash via the mandatory tender offer. The cash consideration of about S$2.9 billion is expected to be funded by a combination of internal cash resources and future senior debt issuances.
The proposed transaction requires DBS shareholders' approval in Singapore. The transaction is expected to be completed in the second half of 2012.
Danamon is a full service commercial bank in Indonesia, with a network of about 3,000 branches and about 6 million customers. The bank has a market leading presence in microfinance, auto lending and a growing business in the small and medium enterprises as well as retail segments.
The Danamon acquisition will see DBS becoming a leading Asian bank, with a more diversified revenue mix across its key markets, namely, Greater China, South Asia and Southeast Asia. DBS noted that Indonesia will become a top-three revenue contributor to the company, alongside Singapore and Hong Kong.
Separately, DBS said it has received approval from Malaysia's central bank, Bank Negara Malaysia, to commence talks with Duxton Investments Pte. Ltd., a wholly-owned subsidiary of FFH, to acquire its 49 percent stake in Vertical Theme Sdn. Bhd.
Vertical Theme owns about 29 percent equity interest in Alliance Financial Group Berhad in Malaysia. The proposed transaction would give DBS Bank an effective economic stake of about 14 percent in Alliance. DBS Bank noted that it would not be required to make any tender offer to the remaining shareholders of Alliance.
DBSDY.PK closed Friday's trading at $44.98, up $0.33 or 0.74 percent on a volume of 79,915 shares.
by RTT Staff Writer
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