Mitsubishi UFJ Overpaying for UnionBanCal


This is not a bad deal, at all, for existing (non-MUFG) UnionBanCal [[UB]] shareholders: a decent premium pushing the stock to a new 52wk high, amidst ongoing market woes, and not to mention UB’s last quote of $65+, which is above the $63 bid by Mitsubishi UFJ Financial Group [[MTU]]. Now, as for MUFG shareholders, you have to scratch your head and wonder if the remaining stake really could not have been acquired at a cheaper price — UB traded as low as $35 a month ago! Furthermore, MUFG seems to have implied it is willing to pay even higher to complete the deal, thus the >$63 trading.

If anything, this is a safe acquisition for MUFG, but not necessarily one to add much shareholder value, if any, at least over the next few years. What it does allow for, however, is further acquisitions. What’s next? How about neighbor Santa Clara-based SVB Financial Group [[SIVB]]? With a $1.9B market cap, it is not insignificant, and it has equally as attractive margins. Unfortunately again for MUFG shareholders, SIVB is not far off 52wk and all-time levels and there would certainly have to be some premium beyond that considering the heavy institutional ownership.
*See the FT clip below. FD: No stakes in any companies mentioned.

clipped from

MUFG to buy out UnionBanCal for $3bn

Mitsubishi UFJ Group (MUFG) on Tuesday offered $3bn to buy the remaining 35 per cent in Union Bank of California it does not already own, in a move aimed at giving Japan’s largest lender a greater presence in the US.
MUFG is offering shareholders $63 per share, or an 8 per cent premium over UNBC’s closing price on Monday and a 24.5 per cent premium on the bank’s average closing price over the last four weeks. UNBC is a commercial bank with 300 branches across the state of California.
The Japanese bank said it had proposed an offer of $58 a share in April this year but failed to reach an agreement with a special committee set up by the US bank to negotiate on behalf of minority shareholders. MUFG said that it remained “open to negotiations with the Special Committee”.

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