Bank Danamon Indonesia’s shares in the stock exchange have jumped to the highest level in over four years on Thursday after it was reported that Japan’s Bank of Tokyo-Mitsubishi UFJ is looking to buy a 40 percent stake in the bank for around ¥200 billion ($1.76 billion).
According to the report by Nikkei, Mitsubishi UFJ Financial Group has decided to hold negotiations with Danamon and Singaporean state wealth fund Temasek Holdings as well as local authorities. The aim for MUFG is to turn Danamon into an equity-method affiliate for the next year, with plans to purchase a majority stake in Danamon.
Danamon confirmed that a unit of Temasek, Asia Financial (Indonesia), which holds a 67 percent stake in Danamon, has received an “expression of interest” in regards to bank ownership.
“We understand that such interest still depends on the outcome of further negotiations and may not necessarily result in binding agreements,” Danamon said on Thursday, as quoted by Nikkei Asian Review.
Since the report was published, the stock price of Bank Danamon reached a new high of Rp.5,725, gaining an 18 percent increase from the previous day. On Thursday, the Bank gained a market capitalization of Rp.46.44 trillion, a value still below MUFJ’s potential acquisition price.
The sale would be Temasek’s first significant effort since 2013 to unload its stake in Bank Danamon, which is Indonesia’s eighth largest bank by assets. In its previous sales attempt, the deal collapsed due to regulatory roadblocks; in particular, a regulation by Bank Indonesia that caps foreign ownership in local banks to 40 percent. However, the stake can be increased under certain circumstances.