The Industrial and Commercial Bank of China (ICBC) has launched a bid to buy 100% of Thailand's ACL Bank for Bt18.29 billion ($545 million).
ICBC agreed on Tuesday to buy 19.26% of the outstanding shares of ACL Bank from Bangkok Bank for Bt3.52 billion. The price translates into Bt11.5 per share, which represents a 15% premium to the closing price of ACL Bank on the Thailand Stock Exchange (SET) on Tuesday. ICBC will now make a tender offer to acquire the remaining equity and preference shares of ACL at the same price.
The total outlay for ACL Bank's 1.09 billion equity shares and 501 million preference shares will be Bt18.29 billion. ICBC will fund the deal using internal resources.
ICBC's takeover is conditional upon cornering at least 51% of the shares outstanding. Accordingly, Bangkok Bank will tender its 19.26% as part of the offer and will be able to cash out its investment only if ICBC receives another 31.74% of the equity.
The Thai Ministry of Finance is the largest shareholder in ACL Bank with a 30.6% stake. Bangkok Bank is the second largest shareholder. Institutional and large individual shareholders own another 19.18%, with the balance 30.96% held by retail shareholders. The tender offer by ICBC is subject to governmental and regulatory approvals in both Thailand and China.
ACL Bank got approval to operate as a commercial bank in Thailand in December 2005, having previously been classified as a financial services company. The bank focuses on small and medium enterprises in Thailand and had total assets of Bt63.7 billion on June 30.
ICBC has recently been expanding its presence overseas through acquisitions and strategic equity investments. In late 2006 it acquired Bank Halim in Indonesia. In August 2007 it bought 80% of Macau's third largest lender, Seng Heng Bank, for $590 million. And later the same year it paid $5.5 billion for a 20% stake in Standard Bank, the largest bank in South Africa.
In June this year ICBC bought 70% of BEA Canada from Hong Kong's Bank of East Asia (BEA) for $73 million.
Deutsche Bank is advising ICBC on its takeover of ACL Bank and will work with the Chinese bank on its first-ever tender offer.
"This transaction will be of great significance to ICBC in the expansion of its business and network in the Mekong River region and also the Southeast Asia region," Jiang Jianqing, ICBC's chairman, said in a written statement.