What happened
　　Legend announced an acquisition transaction with PrecisionCapital S.A. as of September 1
　　st. Legend has conditionally agreed
　　to purchase 89.936% of Banque Internationale àLuxembourg S.A. (held by Precision) for a total EURO1.48bn(Rmb11.65bn). The transaction awaits regulator and Legendshareholder approval.
　　Comments
　　Continue enhancing Legend financial service layout. Thebank is a leading universal bank located in Luxembourg, which iswell-capitalized and engaged in provision of diversified financialservices in European & Middle East markets. After theacquisition, the remaining 10% will be sequentially owned by thestate of Luxembourg. Legend expects the bank will maintainstable growth & decent results, contributing favorable dividends& cash flows thanks to inflation & a rising interest rate differentialin Europe. Legend also plans to further lift the bank’s efficiencyand profitability by improving its information system.
　　Reasonable valuation. The total consideration is EURO1.48bn,implying a bank valuation totaling EURO1.65bn which includesEURO1.53bn in capitals (1.2x P/B) and EURO120mn for fair valueadjustments of its headquarters’ buildings. The deal will be fullypaid in cash upon the approval of related authorities.
　　Financial services to become new pillar segment. Legendexpects to complete more industrial layouts in the global market,cooperating with domestic financial institutions to provideoverseas financing support for domestic enterprises, facilitatingtheir overseas business expansion and related M&As. Thistransaction will also optimize Legend’s strategic portfolio,reducing the total asset proportion of Lenovo from 55% to 30%.
　　Although the transaction barely influences Legend’s NAV in theshort term, we believe more diversified and globalized assetallocation will enhance its capability against market fluctuation.
　　Risks
　　Uncertainties in European markets; weak results of the bank.