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UnionBanCal Nears Mitsubishi UFJ Buyout Deal

Andrew Ross Sorkin and Michael J. de la Merced|The New York Times
Monday, 18 Aug 2008 | 6:26 AM ET

Mitsubishi UFJ Financial Group, one of Japan’s largest banks, is near a deal to buy the remaining part of UnionBanCal Corporation that it does not already own for about $3.5 billion, people involved in the deal said.

The transaction values UnionBanCal, which owns Union Bank of California, one of the 25 largest banks in the United States, at about $10.5 billion.

Deal, Handshake
Deal, Handshake

Mitsubishi is trying to expand beyond its relatively stagnant home market as Japanese companies seek to broaden their presence abroad and take advantage of a weaker dollar.

Mitsubishi raised its bid to slightly more than $73 a share, these people said, up from the $63 a share offer it made last week.

Its first unsolicited offer, made in April, was for $58 a share.

UnionBanCal had rejected Mitsubishi’s bids as “not in the best interest of UnionBanCal’s minority stockholders.” Some analysts had predicted last week that Mitsubishi would raise its offer to at least $70 a share, adding that UnionBanCal has not spurned its Japanese majority stakeholder outright.

Shares in UnionBanCal have risen 42 percent over the last month, buoyed by Mitsubishi’s offer. They closed at $65.49 a share on Friday.

Mitsubishi has said that its proposed acquisition of UnionBanCal, one of California’s largest banks, would be a “first step” in a new strategy, one many analysts think involves buying other American institutions.

Many banks in the United States have been ravaged by problems with subprime mortgages and other loans, which in turn has battered their stock prices. That has prompted interest from buyers like foreign banks and private equity firms.

Other Japanese companies, like the insurer Tokio Marine and the drug maker Takeda Pharmaceutical Company, have struck significant international deals this year to tap into now-cheaper expansion opportunities outside the Japanese economy.

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