3 Malaysia banks announce merger


Three Malaysian banks have announced plans for a merger to create Southeast Asia’s fourth-biggest commercial lender and an Islamic bank.

CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd said Thursday they have submitted the proposed merger to the country’s central bank.

If approved, the combined entity would pass Malayan Banking Bhd as the country’s biggest commercial bank.

The banks said in a joint statement that they hope to sign an agreement by early 2015 and complete the deal by mid-year.

The three-way merger valued at 72.5 billion ringgit (725 billion baht) that creates the nation’s largest bank by assets.

RHB Capital will issue new shares to acquire its larger competitor CIMB for 60.6 billion ringgit, offering 1 RHB share for every 1.38 CIMB shares, according to a joint statement. As part of the transaction, which is expected to be completed by mid-2015, the two companies’ Islamic-banking units will combine with Malaysia Building Society to form a “mega-Islamic bank,” the lenders said.

The agreement highlights a trend towards fewer, bigger lenders in Malaysia as overseas companies expand their presence in the country and leaders of the Association of Southeast Asian Nations press on with integrating the region’s markets. A combination of the three would create a group with total assets of 629 billion ringgit as of June 30, surpassing Malayan Banking’s 583.4 billion ringgit, according to data compiled by Bloomberg.

The deal values CIMB at 1.7 times its book value as of June 30, while RHB would be valued at 1.44 times, according to the statement. As part of the transaction, CIMB’s Islamic unit will acquire Malaysia Building Society and RHB’s Shariah-compliant banking arm for a combined 11.9 billion ringgit, according to the statement.

The resulting Islamic bank will remain a subsidiary of the merged CIMB-RHB entity. CIMB and Malaysia Building Society will be delisted after the merger.

CIMB, RHB and Malaysia Building Society shares were suspended on Thursday before the statement. The companies announced plans for the deal in July and entered a 90-day exclusive agreement to negotiate and finalise the price and structure of the transaction.

The companies said they have applied to the central bank for the merger’s approval. They will begin due diligence with the aim of signing a “definitive” sale and purchase agreement early next year, according to the statement. They will seek other regulatory and shareholder approvals after that.

CIMB shareholders will own 70% of the combined company, with RHB investors holding the rest.

The two companies are structuring a deal between them as a so-called reverse takeover, with RHB issuing new shares to acquire its larger competitor. The transaction values each CIMB share at 7.267 ringgit, a 0.4% premium to CIMB’s market price on July 9, the day before the merger was proposed, according to the statement.

The structure of the deal between RHB and CIMB may allow the firms to overcome resistance from Abu Dhabi-based Aabar Investments PJSC, RHB’s second-largest shareholder, as an outright acquisition by CIMB would require approval from 75% of RHB shareholders.

Aabar will not agree to any deal below 12 ringgit a share for RHB, which is the total cost that it incurred when it bought its stake from Abu Dhabi Commercial Bank PJSC in 2011, the Malaysian Insider reported on July 16, citing people it didn’t identify. The sheikhdom also sent a special envoy to the Malaysian government to convey unhappiness over the merger, according to the Insider.

Aabar paid 10.80 ringgit per share, when RHB was the target of a takeover battle between Malayan Banking and CIMB. CIMB last traded at 6.98 ringgit and RHB at 8.70 ringgit.

“Both sides have to convince Aabar this merger is good for everybody,” said Ang Kok Heng, chief investment officer of Phillip Capital Management Sdn in Kuala Lumpur, which manages $428 million. “They will have to convince Aabar that the bigger group is better, rather than being an investor in RHB alone.”




Source : Bangkok Post | October 9, 2014

Thomas D’Innocenzi


About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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