Malaysia's Maybank in $2.7 billion bid for Indonesia BII

KUALA LUMPUR/SINGAPORE (Reuters) - Malaysia's biggest lender, Malayan Banking Bhd (MBBM.KL), is set to buy a controlling stake in Bank Internasional Indonesia (BII) for $1.5 billion, gaining a foothold in Southeast Asia's biggest economy.

Maybank, which is buying the 56 percent stake in Indonesia's sixth-biggest lender from Singapore state investor Temasek TEM.UL and South Korea's Kookmin Bank 060000.KS, said it would also launch an offer for the remaining 44 percent of BII for about $1.2 billion.

That would value the bank at $2.7 billion, 23 percent above its market value on Tuesday.

Maybank, criticized by analysts for moving too slowly outside its home market, said on Wednesday the acquisition would help it access the potential of Indonesia's relatively untapped and fast-growing banking market.

"I'm very surprised to see the price tag at about 4.6 times 2007 price-to-book value even for a controlling stake," said UBS analyst Joshua Tanja in Jakarta.

"I never realized someone (was) really that eager to buy into the Indonesian banks. It's good news for the rest of the sector and certainly a very good benchmark for other potential strategic sales in the mid-size banks space," he added.

Maybank agreed to buy a 42 percent stake in BII from Singapore state investor Temasek Holdings for 10.4 trillion rupiah ($1.13 billion), while it said it will also acquire almost 14 percent from Kookmin for 3.5 trillion rupiah ($381 million).

However, it was unclear if Kookmin will agree to sell its stake given it was a contender to buy the bank.

"We have yet to receive any notification on the issue. We're not in the stage to decide our stance," a Kookmin official close to the deal told Reuters. "There are several options but we haven't made a decision."

LOAN POTENTIAL

Maybank did not give a per share value of the deal, but the headline price implies 511 Indonesian rupiah per BII share. Shares of BII hit a peak of 480 rupiah, their highest in more than seven years and traded up 12.1 percent to 465 rupiah by 11:30 p.m. EDT. The stock is up over 60 percent so far this year.

Maybank shares were suspended from trade on Wednesday.

"This acquisition enables Maybank to leapfrog into the Indonesian banking market with a significant, well-established presence and attractive platform for further growth," said Aminuddin Mohamad Desa, Maybank's acting chief executive.

"We are excited as the Indonesian banking sector remains underpenetrated with excellent long-term potential."

Global banks are converging on Indonesia to take advantage of strong growth in Southeast Asia's biggest economy, which is seeing fast-expanding loans and higher earnings potential for its financial sector.

Macquarie bank analyst Ismael Pili estimates the loan-to-GDP ratio in Indonesia is 21 percent, against Thailand's 76 percent and South Korea's 79 percent, providing huge potential for further loan growth.

Maybank was one of the three contenders, including Bank of China (601988.SS) and South Korea's Kookmin 060000.KS, that remained after HSBC (HSBA.L), Europe's biggest bank, dropped out of the race, a source told Reuters on Tuesday.

Maybank expects to complete the acquisition within six months of securing approvals from shareholders and the Indonesian central bank, following which it will make the tender offer for the remaining shares in BII, the bank said.

The stake of about 56 percent in BII is held by Sorak Financial Holdings, in which Temasek subsidiary Fullerton Financial Holdings has a 75-percent stake, with Kookmin Bank holding the rest, the statement added.

The Temasek-led consortium originally bought a 51 percent stake in BII in 2003 for $232 million or 82 rupiah per share, which implies a five-fold gain from the sale.

Temasek is selling its stake to comply with a central bank rule that bars foreign investors from owning more than one bank in Southeast Asia's biggest economy. It also owns a controlling stake in Bank Danamon (BDMN.JK).

BII operates in all major banking segments in Indonesia, with a network of more than 230 branches and 700 ATMs, as well as Internet banking and call centre operations.

Goldman Sachs (GS.N) and Credit Suisse (CSGN.VX) advised Temasek on the deal.

(Additional reporting by Harry Suhartono in Jakarta and So-eui Rhee in Seoul; Editing by Neil Chatterjee and Lincoln Feast)