UnionBanCal says Mitsubishi UFJ's bid is too low

In Hungary

UnionBanCal Corp said a $3 billion bid by Mitsubishi UFJ Financial Group Inc for the 35% of the US bank the Japanese company does not already own is too low.

A special committee of UnionBanCal's directors said on Wednesday that Mitsubishi UFJ's $63 per share offer substantially undervalues the bank and is not in the best interests of its minority stockholders.

The committee also disputed Mitsubishi UFJ's characterization of discussions between the two sides over the last few months, saying it had been willing - and remained open - to engaging in talks.

Mitsubishi UFJ, Japan's largest bank, went public with its offer for UnionBanCal on Tuesday, saying its attempts to start negotiations over the past several months had been unsuccessful.

It plans to launch a cash tender offer for the shares on August 18, but has said it remains open to talks.

In April, Mitsubishi UFJ quietly proposed a purchase price of $58 per share, but the San Francisco-based bank's committee decided it was too low.

In its latest statement, the committee said an uncertain outlook for the banking sector should not “inappropriately” affect its value. It said the challenges facing other banks were creating opportunities for UnionBanCal.

UnionBanCal, which has a market value of nearly $8 billion, last month reported a nearly 15% slide in net income on higher provisions for bad loans.

But the bank has largely avoided the subprime mortgage meltdown that has hurt other US regional lenders.

“The proposed price does not reflect the strength of UnionBanCal's strong capital position, the superior credit quality of its assets, and its potential for profitable asset and core deposit growth in the current market environment,” said Richard Farman, chairman of the committee.

UnionBanCal shares closed down 50 cents at $65 on the New York Stock Exchange. Trading above an offer price often implies that investors believe the offer will be raised.

Buying UnionBanCal, parent of Union Bank of California, will give Mitsubishi UFJ full control of one of the 25 largest banks in the United States in terms of assets. The bank had 334 branches in California, Oregon and Washington as of March 31.

A spokesman for Mitsubishi UFJ said on Tuesday that having full control of the US bank would make it easier to implement group strategy, but declined to give specifics.

Mitsubishi UFJ, which has a market capitalization of almost $90 billion, has been struggling to boost profitability at home. It reported a 66% slide in first-quarter net profit earlier this month and forecast virtually no growth for the year ahead. (Reuters)

ADVERTISEMENT

Almost half of Hungarians get fringe benefits, survey shows Analysis

Almost half of Hungarians get fringe benefits, survey shows

19,000 young jobseekers hired in expanded subsidy program Government

19,000 young jobseekers hired in expanded subsidy program

Manager screenings - not just for managers Interview

Manager screenings - not just for managers

Zsa Zsa Gabor's ashes buried in Budapest City

Zsa Zsa Gabor's ashes buried in Budapest

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.