* MUFG to make tender offer at 39 baht per share
* MUFG requires Thai central bank and ministry of finance
* GE exits BAY investment after six years
By Taiga Uranaka and Denny Thomas
TOKYO/HONG KONG, July 2 Japan's Mitsubishi UFJ
Financial Group (MUFG) has agreed to buy a controlling
stake in Thailand's Bank of Ayudhya Pcl for up to 560
billion yen ($5.61 billion) as Japanese lenders expand into
fast-growing Southeast Asian economies to beat slower growth at
MUFG's purchase of up to 75 percent of Thailand's fifth
largest lender would be the biggest acquisition by a Japanese
bank in Southeast Asia. It also ends General Electric Co's
six-year-old investment in Ayudhya, with GE raising $2.41
billion by selling its stake in the Thai bank in two tranches.
The deal requires approval from Thailand's finance ministry
as foreign ownership in domestic banks is capped at 49 percent.
MUFG told a briefing it believes Bangkok would "take a
favourable view" and said it was considering merging its Thai
operations with Ayudhya to comply with Thailand's single
presence policy on bank ownership.
MUFG has sizable operations in Japanese corporations in
Thailand, where Toyota Motor Corp and other
conglomerates own manufacturing plants.
Under the terms of the deal, MUFG will make a tender offer
priced at 39 baht per share, allowing GE to sell its entire
25.33 percent stake in the Thai bank. Thailand's Ratanarak
Group, which founded the bank in 1945, has agreed to retain a 25
percent stake in Ayudhya.
MUFG is paying a price-to-book ratio of 2.02 times for March
2013, which represents a 46 percent premium to the average P/B
ratio of Thai banks, according to Thomson Reuters data.
The tender offer is expected to start in early November and
end in December, the statement added.
GE's sale of its stake in Ayudhya is being closely watched
by ING, which is also preparing to offload its 31
percent stake in Thai lender TMB Bank plc.
APPETITE FOR SOUTHEAST ASIA
MUFG's acquisition of Ayudhya comes less than two months
after rival Sumitomo Mitsui Financial Group's bought a
$1.5 billion stake in Indonesia's Bank Tabungan Pensiunan
Nasional Tbk PT.
Japanese banks and insurers have this year launched deals
worth $8.15 billion in Southeast Asia, attracted by the region's
strong growth prospects, but their operations have been mostly
limited to corporate banking. MUFG's acquisition of Ayudhya
marks its first foray into Asian retail banking outside Japan.
GE acquired a roughly 33 percent holding in Bank of Ayudhya
in 2007 for 22.3 billion baht, or $626 million based on the
exchange rate at the time. It recouped most of its investment
when it sold a 7.6 percent stake for $466 million in September.
MUFG was one of several bidders for GE's stake, but sources
said the Japanese lender was the most aggressive and had also
won the support of the Ratanarak Group.
Morgan Stanley advised GE, while Bank of America Merrill
Lynch advised MUFG, sources told Reuters.