Maybank clinches revised BII deal

Maybank negotiates a 15% rebate on the original price from Fullerton and Kookmin.
Malayan Banking (Maybank) has bought the 55.6% stake in Bank Internasional Indonesia (BII) owned by Fullerton Financial Holdings of Singapore (part of Temasek) and Kookmin Bank of South Korea for M$4.26 billion ($1.24 billion), after negotiating a 15% discount on the price originally agreed in March.

In a statement released on Tuesday, MalaysiaÆs top bank by asset size, said it had moved ahead with the deal after the two majority shareholders had agreed to a rebate of M$758.9 million ($221 million), reducing the price for the stake to Rp433 per share ($0.045). This is an improvement on the deal leaked by Fullerton on Saturday, when it said its offer to reduce the price by $165.9 million had been rejected by Maybank.

The purchase triggers a tender offer for the remaining shares, which Maybank said will be at the original offer price of Rp510 a share, valuing the outstanding 44.3% at M$3.8 billion ($1.2 billion), according to the statement.

Last week, Bank Negara Malaysia, the countryÆs central bank, told state-owned Maybank to lower the value of its bid, which sent the share price of BII, IndonesiaÆs fifth biggest bank, into a tail spin. The stock dropped by more than a third to Rp310 on Friday.

Bank Negara had previously blocked the acquisition after the Indonesian regulator said Maybank would have to sell part of its stake in the future to comply with new rules designed to raise the shareholdings of Indonesian investors. The Malaysian central bank then gave the deal the green light on September 16 after Indonesia's regulator agreed to extend the deadline for Maybank to cut its stake. Then on Friday, Bank Negara told Maybank that the terms needed to be revised û that is, the price reduced û because of turbulence in the global financial markets.

Had the deal not gone ahead, Fullerton and Kookmin would have been able to exercise rights under the Share Sale Agreement that might have led them to make claims against Maybank, which would have stood to lose a M$480 million deposit.

Many investors had thought that the original deal over-priced the Indonesian bank. It valued BII at about 4.6 times book value, which was a lot more than the 1.98 times book value of IndonesiaÆs leading bank, Bank Mandiri, and of Maybank's own price-to-book multiple of 2.3 times.

Fullerton and Kookmin owned their stake in BII through a company called Sorak Financial Holdings. Fullerton owns 75% of Sorak and Kookmin owns the rest.
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