Singapore shuffle

2 April 2012 By John Foley Follow @johnsfoley

The Singaporean fund will exchange its stake in Indonesia’s Bank Danamon for an enlarged slice of DBS, a bigger lender based in its home state. The price is high and there are integration dangers for DBS. But if all goes well, Temasek will enjoy a windfall of almost $2 billion.

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DBS Group, the Singaporean bank, agreed to pay approximately $7.3 billion for Indonesia’s Bank Danamon, offering a 52 percent premium to the previous trading day’s closing price. Together the two would create the fifth biggest Indonesian lender by assets. Danamon is currently the sixth biggest.
DBS is set to buy a 67 percent stake in Danamon for 45 trillion Indonesian rupiah ($4.9 billion) from a unit of Temasek, the Singaporean government wealth fund. Temasek, which also owns 29 percent of DBS, will take DBS shares as payment, increasing its overall holding to slightly above 40 percent.
Temasek said it had waiver exempting it from the regulatory requirement to make an offer for the whole of DBS as normally required when a stake passes the 30 percent threshold. The waiver would need to be approved by independent DBS shareholders at a shareholder meeting.
DBS said it would also extend the cash equivalent of the Temasek offer to other Danamon shareholders, giving them 7,000 rupiah ($0.76) per share.

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