DBS concedes defeat in S'pore merger battle

DBS concedes defeat in S'pore merger battle

SINGAPORE (AFP): DBS Bank has conceded defeat in its merger
battle with United Overseas Bank (UOB) for control of a smaller
rival, leaving the banking industry here closer to only three
domestic players.

DBS allowed its takeover offer for Overseas Union Bank (OUB)
to lapse Friday after getting only 1.2 percent of OUB
shareholders to accept the offer, according to a statement to the
Singapore Stock Exchange by DBS financial adviser Goldman Sachs.

By allowing the offer to lapse, DBS virtually cleared the way
for UOB to pursue its bid for OUB uncontested, analysts quoted by
the Singapore media Saturday said.

"This closes a chapter for the bank and the market will
further applaud the decision not to enter into a bidding war for
OUB," Fong Wai Yip, a banking analyst with JM Sassoon securities,
told the Straits Times.

DBS, Southeast Asia's biggest bank, launched a hostile bid for
OUB on June 22, offering S$9.4 billion (US$5.2 billion) in cash
and shares for the city-state's fourth largest bank.

UOB, the second largest in Singapore behind DBS, topped the
offer with a bid of $10 billion for OUB. Its offer also had a
higher cash component.

While UOB's bid had the support of OUB's owners and top
management, DBS' takeover attempt was riddled with fumbles that
offended management and shareholders.

DBS Chairman S. Dhanabalan issued a public apology after an
analysis of UOB's takeover bid prepared by Goldman Sachs, made
public in Europe, came under fire for casting aspersions on the
motives behind the merger and on the integrity of the boards of
directors of the two rival banks.

UOB directors revealed this week that the humiliating apology
averted their plans to sue DBS.

At a recent meeting, angry DBS shareholders criticized
management for the way it handled the takeover bid and Dhanabalan
admitted the bank, which is 37-percent owned by Singapore's
government, had reached a "low point" in its history.