Published October 1, 2008
Maybank closes sweetened deal for stake in BII
With $315m rebate, it'll pay $1.77 billion for 55.6% stake held by Sorak
By PAULINE NG IN KUALA LUMPUR

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MALAYSIA'S Maybank has clinched a controlling stake in Bank Internasional Indonesia (BII) after persuading the core shareholders of the Indonesian lender to sweeten the deal.
Maybank managed to obtain a rebate of $315.2 million, or the equivalent of a 15 per cent discount, for the shares held by Sorak Financial Holdings. Sorak's shareholders are Fullerton Financial Holdings, a unit of Temasek, and South Korea's Kookmin Bank.
This amounts to an implicit price payable per BII share held by Sorak of 433 rupiah.
Maybank has, nonetheless, indicated its intent to stick to an earlier general offer of 510 rupiah per share payable to BII minorities - probably to appease the Indonesian capital market watchdog Bapepam, which was upset the deal was not completed last week.
'For the avoidance of doubt, the Tender Offer will still be conducted at 510 rupiah per BII share,' Maybank said.
With the price reduction of $315.2 million, the total acquisition cost for Sorak's effective 55.6 per cent equity interest in BII will amount to $1.77 billion.
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The proposed acquisition was completed yesterday. The deal has seen numerous twists and turns, the final one being last week's request by the Malaysian central bank for a price revision in view of the global financial crisis and possible impairment to Maybank's fundamentals if it were to abide by the original price.
However, it was not mentioned in the company's announcement to the exchange whether Bank Negara had approved the revisions to the deal, which in its original form priced the entire BII stake at RM8.6 billion (S$3.6 billion). The bank will now pay slightly over RM7.8 billion.
Analysts saw the new deal as a compromise. The effective discount of some 7 per cent did not reduce BII's valuations by much - the further rebate of $78.8 million from Fullerton's $236.4 million reduction offer last week notwithstanding.
Instead of 4.6 times book, the revised price now values BII at about 4.3 times book, according to AmResearch banking analyst Fiona Leong's back-of- the-envelope calculations.
'It's still pricey,' she opined, pointing out the revised price does not address Bank Negara's concerns on the issue of impairment to Maybank and, by extension, the rest of the local banking system.
The Minorities Shareholder Watchdog Group, which has called for Maybank's board to resign over what they perceive as a wretched proposition, had maintained the bank ought not to pay more than 3 times book, given the prevailing crises in global finance.
Maybank's biggest shareholder is the country's largest state-owned unit trust agency Permodalan Nasional, which has thousands of account holders.
The Employees Provident Fund is also a substantial shareholder of Maybank and, owing to growing concerns of potential impairment losses, has also called on Maybank's board to take responsibility if the transaction proves to be ill advised.