Mitsubishi UFJ Financial Group, Inc.
(also known as MUFG) (
) strategizes to buy majority stake in Thailand based-Bank of
Ayudhya. MUFG is in talks to acquire 51% stake for approximately
¥400 billion ($4.1 billion). The agreement is expected to be
announced in early July.
MUFG planned the acquisition with the target of expanding its
operations in Southeast Asia. The bank aims to provide varied
financial services to clients and businesses in Thailand.
However, regulations in Thailand restrict foreign banks with
local branches to provide capital to its banks. Therefore, MUFG
will merge its Bangkok branch with Bank of Ayudhya to operate
As per the transaction, MUFG will firstly acquire 25% stake which
General Electric Company
) holds in Bank of Ayudhya. Following this buyout, MUFG will
initiate a tender offer for the remaining shares.
If the transaction is announced as per schedule, this would stand
out as the largest acquisition in Asia by a Japanese bank.
Moreover, it would be the second largest deal for MUFG, the first
being the ¥900 billion investment in
), a US investment bank, in 2008.
Currently, Bank of Ayudhya holds assets worth ¥3.4 trillion.
Therefore, MUFG's lending balance is expected to catapult 350%
through the acquisition of Bank of Ayudhya.
Through its major subsidiaries and affiliated companies, MUFG
engages in a broad range of domestic and international financial
operations, including commercial banking, investment banking,
trust banking and asset management services, securities
businesses, credit card businesses, and provides related services
to individual and corporate customers. Therefore, this deal would
help strengthen Asian operations of MUFG.
Currently, MUFG carries a Zacks Rank #1 (Strong Buy). Other
foreign banks that are worth considering include
Sumitomo Mitsui Financial Group Inc.
) with a Zacks Rank #1.
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