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.