Wednesday, October 1, 2008

malaysiakini - Did MAYBANK Play "Deal or No Deal" with RM480m?

If you read about how HSBC walked away from their GBP3.4bil offer for Korea Exchange Bank HSBC pulls out of KEB deal one cannot help but wonder how Maybank made the decision to commit RM480m non-refundable deposit without comprehensive clauses on the regulatory framework changes.

One would have imagined that any experienced advisor would have included such potential new regulations that governments impose to walk away from such deals without penalty.
Temasek was actually in a weak selling position as they had to get out of this bank and so some serious questions should aslo be asked how they arrived at the 4.6times book value that is considered rather high.

According to the Edge Bapepam rejects Maybank’s appeal on BII
Maybank stands to lose a RM480 million deposit it had paid to Singapore investment arm Temasek Holdings Pte Ltd, which had wanted to sell BII to meet Indonesia’s single-presence policy that prohibits foreign investors from owning stakes in more than one bank.

Maybank’s proposed acquisition in BII also did not sit well with investors, as the price paid for the stake was deemed too high. Maybank paid about 4.6 times book value to gain a foothold in the banking business of Southeast Asia’s largest economy.

So this article from malaysiakini Maybank pays RM4 bil for stake in Jakarta bank is not really a cause for much celebration. It is about a 20% discount from the original high price.

It's like going to the bazaar and bidding RM20 for a shirt that costs RM10. Then after bargaining you get it for RM15. But those con-sultants who arranged the deal are definitely laughing - all the way to the bank!

1 comment:

telur dua said...

1) To renege on the deal would cost Maybank RM480 million (being deposit forfeited) and some damage to their standing.

2)Maybank just concluded the deal and saved RM759 million in discount. But because of the still inflated price and the current global economic turmoil, Maybank would stand to lose more than the 759 million short term saving in the years to come. They are in for the long haul now.

Maybank bungled big time on this deal. Option 1 above would have been better assuming there is no specific performance clause.