Singapore's DBS eyes Indonesia with $7.3 bln bank purchase

Singapore's DBS Group Holdings on Monday announced plans to buy Indonesia's PT Bank Danamon for Sg$9.1 billion ($7.3 billion) to ramp up its business in Southeast Asia's biggest economy.

DBS will pay Sg$6.2 billion for the 67.37 percent stake held by a subsidiary of Singapore's state investment firm Temasek Holdings' Fullerton Financial Holdings and will finance the purchase through the issuance of new stock.

DBS will also launch a cash offer of Sg$2.9 billion for the rest of the shares in the Indonesian commercial bank, which will be financed from internal cash resources and future debt issuances, DBS said in a statement.

Temasek will not be totally out of the picture after the share sale -- it currently has a 29.5 percent stake in DBS and this will rise to slightly above 40 percent after the deal is completed, a DBS spokeswoman told AFP.

The bank has been looking to grow its Asian business in recent years and the proposed acquisition of Danamon is its biggest deal since the 2001 purchase of Hong Kong's Dao Heng Bank for Sg$10 billion.

DBS said the purchase, which it expects to complete in the second half of this year, would immediately create the fifth largest lender in Indonesia.

"Indonesia is an exciting Asian market and we believe that we will be able to contribute towards the growth of the Indonesian banking sector," DBS chief executive Piyush Gupta said in the statement.

DBS, the biggest bank in Southeast Asia by assets, in February reported net profit for 2011 rose an annual 15 percent to a record Sg$3.04 billion as income hit a record high of Sg$7.63 billion.

"Indonesia is one of the least penetrated banking markets in the world," Gupta said in a media teleconference from Jakarta after the deal was announced.

"It has got a big domestic consumption economy so you got a good mass market opportunity... It has got a growing middle class so you have good retail opportunity."

Henry Ho, President Director of Danamon, said in a statement that the two banks "should be complementary in many ways."

Danamon has a "proven ability in serving the under-penetrated mass market segment in Indonesia," he said.

"We believe DBS has strengths in corporate banking, capital markets, trade finance and investment management. If this transaction materialises, Danamon will work closely with DBS to become a dynamic Asian banking franchise."

DBS said Danamon, a full-service bank, has about 3,000 branches and outlets with a customer base of six million in a country of 240 million people.

DBS will issue 439 million new shares at an issue price of Sg$14.07 each to pay for Temasek's 67.37 percent stake.

The Singapore bank also said its Sg$2.9-billion cash offer for the remaining PT Bank Danamon stock is the equivalent of 7,000 Indonesian rupiah per share to minority shareholders.

It represents a 56.3 percent premium over the Indonesian bank's one-month volume weighted average price of 4,480 Indonesian rupiah per share.

"To me, it's a fairly priced deal, but for anybody to come and top this price, they will really have to pay something over the top," Gupta said in the media conference.

Justin Harper, a strategist with IG Markets Singapore, said it was too early to assess if DBS paid a fair price for the bank.

"Indonesia is a fast-growing market with one of the world's biggest populations," Harper told AFP.

"As personal wealth and household incomes grow, so too will their need for banking services.

"As for paying a fair price, difficult to say at this stage... But I think Gupta is a shrewd CEO who has done his calculations well and will be keen not to overpay for Danamon," Harper added.

  • 2015 Chevrolet Trax small SUV rolls back to America 5 hours ago
    2015 Chevrolet Trax small SUV rolls back to America

    For the past two years, car shoppers from Acapulco to Winnipeg could wander into their Chevy dealers and kick the tires on a city-sized sport utility vehicle named the Trax — and about 90,000 have done so. Today, Chevy revealed the version of the Trax it will bring to the United States, for those less well-heeled buyers who want the shape of an SUV without the window sticker they usually carry.

  • Ford Transit Skyliner concept revives the ultra-luxury van 8 hours ago
    Ford Transit Skyliner concept revives the ultra-luxury van

    “Once you do stand-up, you don’t want to go back.” No, we’re not talking about comedy, but rather an emerging trend in luxury transport that’s bringing us ever taller, more capacious, more pimpdillyicious limousines. The quote came from a Ford designer, Tim Stoehr, predicting an increase in interest in limos based on big vans like the new Transit. Of course, these are nothing new; up-fitters have taken quite kindly to the Mercedes-Benz Sprinter, and apparently Ford is chomping at the bit to get in on the action, too. So Ford enlisted the help of the largest Ford dealer in the world, Galpin Auto Sports in Van Nuys, Calif., to help design and build its first super-lux Transit concept, dubbed the Skyliner.

  • Driving the 2016 BMW X5 eDrive, the plugged-in SUV 13 hours ago
    Driving the 2016 BMW X5 eDrive, the plugged-in SUV

    Automakers worldwide have gradually (some would say grudgingly) attempted to make their high-profit and highly popular SUVs as efficient and clean-running as their lower weight passenger cars — namely through the grafting of a plug-in hybrid system.

  • Amazon to release smartphone later this year: report
    Amazon to release smartphone later this year: report

    Amazon is preparing to release a smartphone in the second half of 2014, thrusting itself into a market already crowded with Apple and Samsung models, The Wall Street Journal reported. The company aims to announce its new product by the end of June and ship to customers by the end of September in time for the holidays, the Journal said in a Friday report, citing unnamed people briefed on the matter. Amazon, it said, hopes to differentiate its phone from other models with a screen that displays hologram-like three-dimensional images, which can be viewed without special glasses. Earlier this month the retailer unveiled a new media streaming device, Amazon Fire TV, which it touted as simplifying the experience of watching video online.

  • Malaysia flight's co-pilot tried to make cellphone call - report
    Malaysia flight's co-pilot tried to make cellphone call - report

    Investigators probing the disappearance of Malaysia Airlines Flight MH370 suspect that the co-pilot of the jetliner tried to make a call with his cellphone after the plane was diverted from its scheduled route, Malaysia's New Straits Times reported sources as saying on Saturday. The newspaper cited unidentified investigative sources as saying the attempted call from co-pilot Fariq Abdul Hamid's phone was picked up by a cellphone tower as the plane was about 200 nautical miles northwest of the west coast state of Penang.