Allen & Overy is advising the Bank of Tokyo Mitsubishi UFJ (BTMU), a subsidiary of Mitsubishi UFJ Financial Group (MUFG), on its bid to acquire a majority stake, valued at $5.6 billion, in Thailand’s Bank of Ayudhya Pcl.
The Japanese bank reached an agreement with GE Capital International Holdings Corp (GE) to buy its 25.33 percent stake in Bank of Ayudhya Plc through a voluntary tender offer.
The deal, which is subject to regulatory approvals, marks the biggest acquisition by a Japanese bank in the region.
Japanese law firm Nishimura & Asahi and an Allen & Overy team led by Tokyo partner Simon Black and Bangkok partner Suparerk Auychai are advising BTMU on the deal. Sullivan & Cromwell, led by Tokyo partner Keiji Hatano and New York partner Donald Toumey, is acting as U.S. counsel to BTMU. King & Wood Mallesons and Thailand’s Thanathip & Partners are advising GE.
Thailand’s central bank wants to boost the competitiveness of its banking sector to attract more foreign investment into Southeast Asia’s second-largest economy. For foreign lenders keen to tap the region's booming economies, gaining control is crucial to making their investments worthwhile.
Under the current regulations, foreign banks can buy up to 25 percent of a Thai bank without central bank approval but that changes if the stake rises to up to 49 percent. More than that requires the approval of the finance ministry.
BTMU’s deal to buy up to 75 percent of the mid-sized Ayudhya appears likely to win Thai
regulatory approval, Reuters reported.
MUFG, Japan’s largest bank, told a briefing on July 2 it believes Bangkok would “take a favourable view” of its deal to buy the Ayudhua stake. It also said it was considering merging its Thai operations with the domestic lender to comply with Thailand’s single presence policy on bank ownership.
The transaction is expected to complete in December this year.
Kanishk Verghese is North Asia journalist at ALB. Follow us onTwitter: @ALB_Magazine.
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