SINGAPORE, April 2 (Reuters) - DBS Group Holdings, Southeast Asia's biggest bank, has agreed to pay S$9.1 billion ($7.24 billion) for Indonesia's Bank Danamon in shares and cash, stumping up a premium of around 52 percent to become the country's fifth-biggest lender.
Singapore-based DBS, which is making the move as part of its goal to become a leading Asia-wide bank, said on Monday it would initially pay S$6.2 billion in shares to buy a 67.37 percent stake from Singapore state investor Temasek Holdings.
It would then buy out Danamon's minority investors for cash, with both the share and cash payments pitched at 7,000 rupiah ($0.77) per Danamon share.
DBS said it would issue 439 million new shares to Temasek at S$14.07 each. The state investor already owns about 29 percent of DBS.
When combined with DBS' existing Indonesian assets, the acquisition would make DBS the country's fifth-largest lender.
In the same statement, DBS said Malaysia's central bank had allowed it to begin talks with a unit of Temasek to buy an effective 14 percent stake in Alliance Financial Group .
These acquisitions would be the first major deals by DBS Chief Executive Piyush Gupta, who took the helm of the Singapore-based lender in late 2009.
The biggest challenge will be persuading investors that DBS has not overpaid, as it did when it bought Hong Kong's Dao Heng Bank more than a decade ago.
Gupta, 52, has spent a large part of his career in India and Southeast Asia - areas where DBS is keen to grow - but he will be tested in Indonesia where rules on foreign bank ownership change frequently.
DBS had record net profit of more than S$3 billion ($2.39 billion) last year.
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