23% premium sounds logical for BII
It seems like banks have had enough of playing ‘cheerleaders’ in
the M&As game. And if you thought the ABN Amro deal was all there was, Malaysian Banking Bhd (Maybank) is here to prove you wrong with its 55.7% stake-buy in Bank International Indonesia (BII) – a $1.5 billion deal announced on March 26, 2008. Also, with Maybank making a further open offer to other minority shareholders for the remaining 44.3% stake, the overall deal is expected to create a $2.7 billion dent in Maybank’s pocket.
Dato Desa, CEO, Maybank, justifies the deal as, “The strategic and financial rationale for the acquisition is extremely compelling. The acquisition will transform our growth prospects in Indonesia...” Surely, this is a huge step forward in Maybank’s strategy to regionalise its operations through investments in high-growth markets. The logic for the deal, too, sounds valid with margins in Malaysia drying-up fast due to competition intensifying by the day. However, Maybank’s stakeholders appeared critical as its share prices fell to a 3.5-year low post-announcement to 8.40 Ringgit. Some analysts, too, saw the deal as being over-valued, especially considering that BII performed under-par for the past 2 years, with profits falling by a whopping 36% during 2007, and another 13% during 2006 as Julian Chua, Analyst, Citigroup voices, “The price tag on BII is 50% higher than initially assumed for mediocre franchise...” However, Citigroup & FitchRatings are of an opinion that in the long-term, Indonesia has good prospects & Maybank has taken the right cue. As a matter of fact, Maybank says that it is targetting an increase in the loans of BII by over 20% in 2008.
Chris Oh, Analyst, JP Morgan Chase also supports this move as he divulges, “The BII was a ‘must-have’ strategic acquisition for Maybank. BII is projected to have minimum sustainable return of at least 20% beyond FY 2010 (sans factoring-in synergies).” Adding all this to Malaysia’s growing trade-ties with ASEAN trading partners, $2.7 billion suddenly appears ‘loose change’!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
It seems like banks have had enough of playing ‘cheerleaders’ in
the M&As game. And if you thought the ABN Amro deal was all there was, Malaysian Banking Bhd (Maybank) is here to prove you wrong with its 55.7% stake-buy in Bank International Indonesia (BII) – a $1.5 billion deal announced on March 26, 2008. Also, with Maybank making a further open offer to other minority shareholders for the remaining 44.3% stake, the overall deal is expected to create a $2.7 billion dent in Maybank’s pocket.Dato Desa, CEO, Maybank, justifies the deal as, “The strategic and financial rationale for the acquisition is extremely compelling. The acquisition will transform our growth prospects in Indonesia...” Surely, this is a huge step forward in Maybank’s strategy to regionalise its operations through investments in high-growth markets. The logic for the deal, too, sounds valid with margins in Malaysia drying-up fast due to competition intensifying by the day. However, Maybank’s stakeholders appeared critical as its share prices fell to a 3.5-year low post-announcement to 8.40 Ringgit. Some analysts, too, saw the deal as being over-valued, especially considering that BII performed under-par for the past 2 years, with profits falling by a whopping 36% during 2007, and another 13% during 2006 as Julian Chua, Analyst, Citigroup voices, “The price tag on BII is 50% higher than initially assumed for mediocre franchise...” However, Citigroup & FitchRatings are of an opinion that in the long-term, Indonesia has good prospects & Maybank has taken the right cue. As a matter of fact, Maybank says that it is targetting an increase in the loans of BII by over 20% in 2008.
Chris Oh, Analyst, JP Morgan Chase also supports this move as he divulges, “The BII was a ‘must-have’ strategic acquisition for Maybank. BII is projected to have minimum sustainable return of at least 20% beyond FY 2010 (sans factoring-in synergies).” Adding all this to Malaysia’s growing trade-ties with ASEAN trading partners, $2.7 billion suddenly appears ‘loose change’!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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