Maybank had been due to complete its purchase on Friday of a 55.5% stake in BII, for US$1.5 billion. Maybank stood to lose more than 400 million ringgit if it should walk away from the deal. The regulator "changed" the rules for the deal when it come to approving the deal. The changes alter the deal strategy significantly.
I DID NOT HEAR OF SELLERS THEN OFFERING TO renegotiate the deal, or return the deposit if Maybank wanted to walk away, they held onto the terms of the deal. Since then the share price of BII has fallen enormously. NOW THE SELLERS OFFERED to reduce the deal by 480 million ringgit. The rebate is more than the 400 million ringgit deposit Maybank stands to lose by walking away from the acquisition yesterday.
Moral of the story, how many idiots are running around in this deal? Why do the idiots think there are stupider idiots running around as well in this deal?
Bank Negara had previously blocked the acquisition after Indonesian regulators said Maybank would have to sell part of its stake in the future to comply with new rules designed to raise the shareholdings of Indonesian investors. The central bank then gave the deal the green light on September 16 after Indonesia's capital markets regulator agreed to extend the deadline for Maybank to cut its stake. In the latest move, it told Maybank that the terms needed to be revised – that is, the price reduced – because of turbulence in the global financial markets.
The concern of investors and also Bank Negara Malaysia (BNM) is that Maybank would end up losing a pile if it were to pare down its stake by 20% within two years. This is because it is acquiring the shares at Rp510 while it is less than Rps330 now.
Maybank said in a statement dated Sept. 25 the Malaysian central bank ordered it to reduce the price or scrap the transaction, sparking a dispute with Indonesian authorities and a record slump in Bank Internasional's share price. Temasek said Maybank first asked for a one-month extension and a price reduction on Sept. 24, which it turned down a day later. It was informed of the objections by Bank Negara, or the central bank, on Sept. 25 at 11:32 p.m. local time, it said.
Khazanah Nasional Bhd., Malaysia's sovereign wealth fund, is paying 2.5 times the book value of PT Bank Niaga and three times book for PT Bank Lippo as it buys the remaining shares of the two Indonesian banks in a proposed merger. Khazanah and its unit, like Temasek, are either selling one of the two banks they own or merging them to meet an Indonesian central bank deadline limiting ownership to just one local bank by 2010. (Maybank's purchase price for BII was 4.7 times book value, which was a lot more than the 1.98 times book value of Indonesia’s leading bank, Bank Mandiri, and of Maybank's own price-to-book multiple of 2.3 times.). Bank Internasional's shares traded at 310 rupiah yesterday, compared to the deal price of 510 rupiah.
''You can't do this,'' Achmad Fuad Rahmany, chairman of Indonesia's market regulator, said in an interview in Jakarta yesterday. Renegotiating the price ``will cause losses to investors.'' OH YES WE CAN, just like the way you enforced a "selling down clause" in your approval for the Maybank deal. That clause basically altered the strategic value behind the deal. The deal terms may be agreed upon, but always upon the deal being approved by the relevant authorities. Now the authorities have "materially changed" the strategic value of the deal. Maybank can walk away and lose their deposit. What do you mean "you can't do this", Encik Achmad???
When Maybank was faced with the embarrasing situation of losing the deposit for having to walk away - the sellers DID NOT offer a way out for Maybank, knowing full well that Bank Negara was making life hell for Maybank with the additional clause inserted by the Indonesian authorities. Maybank was getting slammed (correctly) for not tightening the deal terms (e.g. deal off if approval is not gotten from the Indonesian authorities, or if there are conditional "changes" to the deal when being approved by the Indonesian authorities).
Make no mistake, i am not siding with Maybank here - in fact the people responsible for the deal should sent back to school.
So to the buggering sellers offering the 480 million ringgit discount - go fly my wau! Too little too late.
Maybank, take your medicine and walk away, lose 400 million ringgit OK what... but surely SOME BLOODY heads must roll - who were the advisors, who were the legal advisors, who were the managers in charge of negotiating the deal???
Temasek and Kookmin, go find your Alan Bond scalp somewhere else!
... and its a celebratory Raya at Bank Negara after all...
p/s photo: Jamie Yeo
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