Hot stock: UOB up 1.4% after Citi consumer business acquisition

SHARES of UOB U11 rose as much as 1.4 per cent on Friday (Jan 14) amid heavy trading, following the bank's announcement that it has agreed to acquire Citigroup's consumer banking businesses comprising its unsecured and secured lending portfolios, wealth management and retail deposit businesses in Indonesia, Malaysia, Thailand and Vietnam.

The index counter last closed at S$29.18 on Thursday, down S$0.26 or 0.9 per cent.

Shortly after resuming trading on Friday, the counter jumped as much as 1.4 per cent or S$0.42 to trade at S$29.60 at 9.05 am, with 415,600 shares changing hands.

It later eased to trade at S$29.55 as at 9.27 am, making it the second most active counter by value on the Singapore bourse during the morning session.

A married deal of 70,600 shares at S$29.555 was made at 9.19 am on Friday, according to ShareInvestor data. 

For the proposed acquisition, UOB will pay a cash consideration of S$915 million plus the net asset value of Citi's consumer business as at the date of completion, the bank said in a bourse filing on Friday morning.

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Citi's consumer business has an aggregate net asset value of about S$4 billion and a customer base of about 2.4 million as at Jun 30, 2021. It generated income of around S$500 million in the first half of 2021.

The proposed acquisition is expected to be "immediately accretive" to UOB's earnings per share and return on equity, excluding one-off transactions.

UOB expects it will complete the acquisition between mid-2022 to early 2024, although the completion in each country will be conditional on obtaining regulatory approvals relevant to each country and in Singapore.

The acquisition will likely be financed through excess capital.

As part of the proposed acquisition, UOB intends to bring onboard the employees in Citi consumer business in a bid to further strengthen and deepen its Asean franchise, it said.

As at 10.24 am, DBS D05 was trading up S$0.28 or 0.8 per cent at S$35.78, with 1.2 million shares changing hands. OCBC O39 w : O39 0%as up S$0.02 or 0.2 per cent to reach S$12.26, with 2 million shares changing hands.