UPDATE: MUFG Upgrades UnionBanCal Offer 17%; Bid Now Recommended
UPDATE: MUFG Upgrades UnionBanCal Offer 17%; Bid Now Recommended
TOKYO -(Dow Jones)- Mitsubishi UFJ Financial Group Inc. (8306.TO) Monday said it agreed to raise an offer to buy out minority shareholders in California unit UnionBanCal Corp. (UB) by 17% in a move to quickly win over dissident independent directors as it prepares the ground for fresh acquisitions in the U.S.
In a statement, MUFG, Japan's biggest bank by assets, said that after consultations with a special committee of independent UnionBanCal directors, it will now pay $73.50 per share, up from its Aug. 12 offer of $63, to buy the 35% of the San Francisco-based bank it doesn't already own.
That lifts the deal's price tag to $3.5 billion, and values the whole of the target at over $10 billion.
The special committee consisting of independent directors, which previously said MUFG wasn't offering enough, recommended the new deal to shareholders, and the tender offer will now commence Aug. 29 at the latest, rather than today as originally proposed, and run for 20 days.
MUFG said Aug. 12 that the proposed acquisition will leave it better placed to take part in the future consolidation of the U.S. banking industry, hit hard by the crisis in subprime mortgage lending that engulfed the industry last year. The move highlights the growing attraction of overseas markets including the U.S. for Japanese companies chasing growth outside the country's sluggish domestic economy.
With the independent directors' vocal opposition coming on top of UnionBanCal shares rising to trade at over $65 apiece in New York, MUFG's move surprised few in the Tokyo market. But analysts expressed mixed views on the implications of the new deal terms.
David Threadgold, analyst at Fox-Pitt Cochran Caronia, was among those who viewed the higher offer as both predictable and sound.
"Our US analysts have a fair value of $70 per share for UnionBanCal...so $ 73.50 seems like a small premium worth paying to get the approval of the special committee and the board of UBC," said Threadgold, who rates MUFG at Outperform. The higher price tag "seems like a small premium worth paying to get the approval of the special committee...The extra money is neither here nor there for MUFG. They just want to get the deal done without any major problems."
For others, though, the longer the tender offer takes, the more it could affect MUFG's shares negatively.
"Investors won't be relieved until the tender offer is completed," said Mitsushige Akino, a general manager at Ichiyoshi Asset Management, adding that minority shareholders may not be satisfied with the new price - even if the independent directors are - and the bank could be forced to raise the bid price again.
MUFG's shares closed Monday in Tokyo up 3.3% at Y845 before the new deal terms were announced. But that's still 3.8% lower than the level at which MUFG shares closed just before the original UnionBanCal buyout offer was disclosed. All of Japan's main banks performed well Monday as the Nikkei market index ended the day 1.1% higher.
The skeptics of the deal who helped squeeze MUFG's share price lower after Aug. 12 aren't likely to be placated by the new terms.
The original price was already high, but "$73.50 is too expensive," said one analyst, speaking on condition of anonymity. "The main issue of this acquisition is whether MUFG can operate UnionBanCcal better than the (current) shareholders...There is no previous example of this kind of acquisition by a Japanese bank succeeding."
-By Atsuko Fukase, Dow Jones Newswires; 813-5255-2957; atsuko.fukase@ dowjones.com
(Kjell Ericson and Fumie Mitani contributed to this story)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=fFMoDIEOZrOUt1ST8vlzMg%3D%3D. You can use this link on the day this article is published and the following day.
TOKYO -(Dow Jones)- Mitsubishi UFJ Financial Group Inc. (8306.TO) Monday said it agreed to raise an offer to buy out minority shareholders in California unit UnionBanCal Corp. (UB) by 17% in a move to quickly win over dissident independent directors as it prepares the ground for fresh acquisitions in the U.S.
In a statement, MUFG, Japan's biggest bank by assets, said that after consultations with a special committee of independent UnionBanCal directors, it will now pay $73.50 per share, up from its Aug. 12 offer of $63, to buy the 35% of the San Francisco-based bank it doesn't already own.
That lifts the deal's price tag to $3.5 billion, and values the whole of the target at over $10 billion.
The special committee consisting of independent directors, which previously said MUFG wasn't offering enough, recommended the new deal to shareholders, and the tender offer will now commence Aug. 29 at the latest, rather than today as originally proposed, and run for 20 days.
MUFG said Aug. 12 that the proposed acquisition will leave it better placed to take part in the future consolidation of the U.S. banking industry, hit hard by the crisis in subprime mortgage lending that engulfed the industry last year. The move highlights the growing attraction of overseas markets including the U.S. for Japanese companies chasing growth outside the country's sluggish domestic economy.
With the independent directors' vocal opposition coming on top of UnionBanCal shares rising to trade at over $65 apiece in New York, MUFG's move surprised few in the Tokyo market. But analysts expressed mixed views on the implications of the new deal terms.
David Threadgold, analyst at Fox-Pitt Cochran Caronia, was among those who viewed the higher offer as both predictable and sound.
"Our US analysts have a fair value of $70 per share for UnionBanCal...so $ 73.50 seems like a small premium worth paying to get the approval of the special committee and the board of UBC," said Threadgold, who rates MUFG at Outperform. The higher price tag "seems like a small premium worth paying to get the approval of the special committee...The extra money is neither here nor there for MUFG. They just want to get the deal done without any major problems."
For others, though, the longer the tender offer takes, the more it could affect MUFG's shares negatively.
"Investors won't be relieved until the tender offer is completed," said Mitsushige Akino, a general manager at Ichiyoshi Asset Management, adding that minority shareholders may not be satisfied with the new price - even if the independent directors are - and the bank could be forced to raise the bid price again.
MUFG's shares closed Monday in Tokyo up 3.3% at Y845 before the new deal terms were announced. But that's still 3.8% lower than the level at which MUFG shares closed just before the original UnionBanCal buyout offer was disclosed. All of Japan's main banks performed well Monday as the Nikkei market index ended the day 1.1% higher.
The skeptics of the deal who helped squeeze MUFG's share price lower after Aug. 12 aren't likely to be placated by the new terms.
The original price was already high, but "$73.50 is too expensive," said one analyst, speaking on condition of anonymity. "The main issue of this acquisition is whether MUFG can operate UnionBanCcal better than the (current) shareholders...There is no previous example of this kind of acquisition by a Japanese bank succeeding."
-By Atsuko Fukase, Dow Jones Newswires; 813-5255-2957; atsuko.fukase@ dowjones.com
(Kjell Ericson and Fumie Mitani contributed to this story)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=fFMoDIEOZrOUt1ST8vlzMg%3D%3D. You can use this link on the day this article is published and the following day.
posted by sarfunnisha @ 6:15 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home