Mitsubishi UFJ Financial Group Inc. plans to buy Thailand’s Bank of Ayudhya Pcl for as much as 560 billion yen ($5.6 billion) in the largest banking takeover in the Southeast Asian nation.
Japan’s biggest bank will seek to buy as much as 75 percent of the Bangkok-based lender from shareholders including General Electric Co. through a tender offer, Mitsubishi UFJ said in a filing to the Tokyo Stock Exchange Tuesday. The Japanese company plans to offer 39 baht a share for the Thai bank, or 5.4 percent more than Tuesday’s closing price.
The purchase would give Mitsubishi UFJ a bigger foothold to expand retail and corporate banking in Southeast Asia’s second-biggest economy, which is forecast to expand more than three times faster than Japan’s next year. Japanese megabanks are buying assets abroad to counter the nation’s shrinking population and the lowest loan profitability in Asia.
Employees walk past the Bank of Ayudhya Pcl’s branch in Bangkok. (Bloomberg)
“Bank of Ayudhya has a wide branch network and strong retail customer base that will give Mitsubishi UFJ immediate access to Thailand’s lucrative market,” said Jintana Mekintharanggur, who helps oversee about $200 million as director of equity investment at Manulife Asset Management Co. “Mitsubishi’s strong lending to large corporations, especially Japanese companies operating in Thailand, will support Ayudhya’s wholesale banking.”
Assuming Mitsubishi UFJ buys the 75 percent stake for 560 billion yen, that would imply a multiple of 2 times book value at the end of last year, according to Mac Salman, an analyst at Jefferies Group LLC in Tokyo. That compares with average 1.7 for listed Thai lenders, data compiled by Bloomberg show.
Mitsubishi UFJ would be the first Japanese bank to gain control of an Asian lender, Salman wrote in a note Tuesday. The plan is based on the Ratanarak family retaining 25 percent ownership, Mitsubishi UFJ said. GE will sell its 25 percent stake, according to the statement. The Japanese lender will work with the family to expand Bank of Ayudhya’s business.
(Bloomberg)