JAPAN'S Mitsubishi UFJ Financial Group has agreed to buy a controlling stake in Thailand's Bank of Ayudhya for up to 560 billion yen (US$5.61 billion) as Japanese lenders expand into fast-growing Southeast Asian economies to beat slower growth at home.

MUFG's purchase of up to 75 percent of Thailand's fifth-largest lender would be the biggest acquisition by a Japanese bank in Southeast Asia. It also ends General Electric Co's six-year-old investment in Ayudhya, with GE raising US$2.41 billion by selling its stake in the Thai bank in two tranches.

The deal requires approval from Thailand's finance ministry as foreign ownership in domestic banks is capped at 49 percent. MUFG told a briefing it believes Bangkok would "take a favorable view" and said it was considering merging its Thai operations with Ayudhya to comply with Thailand's single presence policy on bank ownership.

MUFG has sizable operations in Japanese corporations in Thailand, where Toyota Motor Corp and other companies own factories.

Under the terms of the deal, MUFG will make a tender offer priced at 39 baht (US$1.26) per share, allowing GE to sell its entire 25.33 percent stake in the Thai bank. Thailand's Ratanarak Group, which founded the bank in 1945, has agreed to retain a 25 percent stake in Ayudhya.

MUFG is paying a price-to-book ratio of 2.02 times for March 2013, which marks a 46 percent premium to the average P/B ratio of Thai banks, according to Thomson Reuters data.

The tender offer is expected to start in early November and end in December, the statement added.

GE's sale of its stake in Ayudhya is being closely watched by ING, which is also preparing to offload its 31 percent stake in Thai lender TMB Bank.