Stakes raised in S'pore's battle of the banks

Stakes raised in S'pore's battle of the banks

SINGAPORE (AFP): The stakes in Singapore's battle of the banks
rose sharply Friday when United Overseas Bank (UOB) bid US$5.5
billion for Overseas Union Bank (OUB), topping an offer by a
bigger rival.

Analysts said the offer had a better chance of being accepted
because it had won the support of key OUB shareholders who were
opposed to a $9.4 billion bid last Friday by DBS Group Holdings,
Singapore's biggest local bank.

UOB, which had been the odd man out of the four major
Singapore banks in the takover frenzy, struck with a vengeance
Friday, offering S$4.02 ($2.2) in cash plus 0.52 UOB shares for
each share in rival OUB, for a total value of 10 Singapore
dollars a share.

The offer, representing a premium of 39 percent over the
average closing price of OUB shares over the past two months,
values UOB at around S$10 billion (US$5.5 billion).

The bidding war over OUB followed Oversea-Chinese Banking
Corp's (OCBC) $4.8 billion cash offer for Keppel Capital
Holdings, the parent of Singapore's smallest banking group Keppel
TatLee.

Together, UOB and OUB would have assets totaling S$113
billion, challenging DBS' dominance in the domestic market,
analysts said.

"I think that given that it's a friendly takeover... I would
say for all intents and purposes it's a done deal," said Kevin
Scully, managing director of NetResearch Asia.

He noted that there has already been a 15 percent acceptance
from OUB's major shareholders.

Asked if DBS would make a counterbid, Scully said: "I think
it's going to be difficult for them to do that, given that their
offer is primarily in shares.

"I think the only way to up the ante is actually to increase
the number of DBS shares they are giving ... (but this) will not
be very positive for their earnings outlook."

DBS had 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 a share.

In a statement Friday, DBS said it was carefully studying the
rival bid by UOB and would respond in due course.

But Wee Cho Yaw, chairman and chief executive of UOB, was
already sounding victorious.

"The board of UOB is delighted to have won the support of the
principal shareholders of OUB for the offer. The board believes
that the combined group will have considerably enhanced
competitive position," he said.

Lee Hee Seng, chairman of OUB, welcomed the takeover offer
from UOB.

"A combination of our two banks will give us the size and
scale to compete more effectively in Singapore and in the
region," he said, adding each would build on their respective
strengths.

DBS Group chief executive Philippe Paillart was meeting with
fund managers in the United States to drum up investor support
for its bid for OUB, the bank said in a statement earlier Friday.

DBS, which is the biggest bank in Southeast Asia and has
ambitions of becoming a key player in the wider Asian region,
announced Friday that the Hong Kong Monetary Authority had
approved its purchase of the territory's Dao Heng Bank Group for
US$5.4 billion.