DBS announces US$5b takeover bid for rival S'pore bank
DBS announces US$5b takeover bid for rival S'pore bank
SINGAPORE (AFP): DBS Group Holdings Ltd. on Friday made a surprise US$5 billion offer to take over rival Overseas Union Bank Ltd. (OUB) as the shakeout of the Singapore banking sector moved into a higher gear.
The offer by the parent of DBS Bank, the largest in Southeast Asia, followed a bid by the Oversea-Chinese Banking Corp. Ltd. (OCBC) to buy Keppel Capital Holdings Ltd., owner of the smallest of the island's five local banks, Keppel TatLee.
A merger between DBS and OUB would create the third largest commercial bank in Asia and one of the 50 biggest banking groups in the world, DBS officials said.
DBS offered S$1.14 (63 US cents) in cash plus 0.61 DBS shares for each OUB share, for a total value of 9.50 dollars per share, compared to OUB's share price of 9.05 dollars before trading was suspended earlier Friday.
Analysts said this would put the total valuation of OUB at around S$9.4 billion (US$5.2 billion).
The government has been pushing for consolidation in the local banking industry, saying only big institutions can compete effectively in a globalized economy.
DBS has rapidly expanded in recent years by acquiring the local Post Office Savings Bank and taking over banks in Thailand, the Philippines, Indonesia and Hong Kong, where it owns Dao Heng Bank and Kwong On Bank.
Nicholas Yeo, investment manager at Aberdeen Investment Asset Management, said in a televised interview that if DBS succeeds in acquiring OUB "they would really have the majority of the Singapore banking business."
But he expressed surprise at the move, which followed the acquisition of Dao Heng in Hong Kong for $5.4 billion.
"They will not have enough excess capital for another acquisition. It's definitely a very surprising move," he said, adding that he expected DBS to fund the acquisition with more equity and debt issues.
OCBC on Thursday said it will launch a S$3 billion (US$1.6 billion) bond offer to boost its capital base ahead of its possible acquisition of Keppel Tat Lee Bank.
Analysts said the bond issue was a preemptive move by OCBC to boost its capital base in case it succeeds in its all-cash offer to buy Keppel's parent for $4.8 billion.