PT Bank Danamon Indonesia (BDMN) climbed the most in more than 13 years after DBS Group Holdings Ltd. (DBS) offered to buy the lender for about $7.2 billion in Southeast Asia’s biggest banking deal. DBS fell.
Shares of Jakarta-based Bank Danamon jumped as much as 50 percent to 6,900 rupiah, the biggest intraday gain since Aug. 10, 1998. The shares rose 39 percent to 6,400 rupiah at the close after trading was halted yesterday when the offer was announced. DBS, Southeast Asia’s largest bank, dropped as much as 4.2 percent to S$13.58, the steepest intraday decline in six months, before closing at S$13.79.
DBS, in which Singapore’s state-owned investment company Temasek Holdings Pte (TMSK) has a controlling 29.5 percent stake, said it will pay its biggest shareholder 45.2 trillion rupiah ($4.9 billion) in new shares for its 67 percent stake in Danamon and buy the remaining stock from others for 21.2 trillion rupiah in cash. The 7,000 rupiah-a-share offer is at a 52 percent premium to Danamon’s closing price on March 30.
“This is an extraordinary event,” said Abdul Ghofur Pahlevi, an analyst at PT Andalan Artha Advisindo Sekuritas in Jakarta. “With the premium valuation and DBS’s intention to buy the full stake in Danamon, the deal offers an opportunity for a huge short-term gain.”
For DBS, acquiring Indonesia’s sixth-largest bank by assets will help it branch out from Singapore and Hong Kong to tap an economy that grew last year at the fastest pace since before the Asian financial crisis. Trade and infrastructure finance as well as corporate and retail banking are among the promising areas in Indonesia, Southeast Asia’s biggest economy, DBS Chief Executive Officer Piyush Gupta said yesterday.
The transaction will cost Singapore-based DBS about 66.4 trillion rupiah if all Danamon shareholders accept the offer, making it the biggest acquisition by a Southeast Asian bank. DBS said the deal is expected to close in the second half of the year, subject to regulatory approvals.
“Investors who don’t want to deal with the immediate complexities of the deal may want to move out,” said Anand Pathmakanthan, an analyst at Nomura Singapore Ltd. “There are approvals to be got, and other regulatory issues.”
Following the takeover, Temasek’s stake in DBS will increase to 40.4 percent from 29.5 percent, the lender said.
Danamon’s 3,000-branch network serves 6 million customers. The Indonesian economy grew 6.46 percent last year, a pace unseen since before the Asian crisis in 1997. It is forecast to grow 6.5 percent this year.
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