Bangkok Bank to buy Bank Permata; share price dips 2.48%

Thailand’s Bangkok Bank Public Company Limited announced on Thursday 12 December that it would acquire an 89.12% stake in Indonesia’s Bank Permata.

As part of the ‘conditional share purchase’, Bangkok Bank will buy over current owners Standard Chartered Bank and PT Astra International Tbk’s shares for an indicative amount of US$2.67 billion.

The transaction is being made at US$0.11 per share, representing a valuation that is 1.77 times of Permata’s book value.

It is expected to be completed before the end of 2020, following which Bangkok Bank would decide on whether to purchase the remaining 10.88% of equity.

Share price lowest in three years

Following the announcement, Bangkok Bank’s share price opened at 156 Thai Baht per share on Friday 13 December, 2.48% lower than its previous close.

This is the stock’s fifth consecutive day of price decline, and its lowest share price in three years, since hitting 153.60 Thai Baht in November 2016.

Bank Permata, on the other hand, opened at 1,310 Indonesian Rupiah per share, its highest share price in one month.

These price movements are typical in an acquisition deal, where the target company tends to see share price increase, while the buying party tends to experience a drop in stock value.

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Outlook for both parties

The acquisition, said Bangkok Bank Chairman Piti Sithi-Amnuai, is part of the company’s wider plans to strengthen its position in the region.

‘International expansion is our key strategy. Indonesia in particular is a key focus for us, as it is one of the fastest-growing major economies in Asia with highly attractive macroeconomic fundamentals, favourable demographics, and increasing ASEAN (Association of Southeast Asian Nations) regional integration,’ said Sithi-Amnuai.

The bank added in a press release that the deal is expected to grow its earnings per share and return on equity immediately post-completion, with capital position expected to remain robust following the completion of the Transaction.

Chartsiri Sophonpanich, President of Bangkok Bank, noted: “Based on our first-hand experience in Indonesia, we believe that the Indonesian banking sector is poised to continue delivering attractive growth while maintaining healthy margins.’

For Bank Permata, currently the twelfth largest bank in Indonesia by total assets, the acquisition by Bangkok Bank will allow it to tap on the latter’s expertise and resources in corporate and SME banking across Asia.