CIMB and Maybank had each indicated that they would not overpay for RHBCap as it was not vital for their growth plans.
Read More : http://www.btimes.com.my/articles/mabortf/Article/
Kuala Lumpur: The country's two largest banks, Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd, have each aborted plans to pursue a takeover of RHB Capital Bhd (RHBCap), a move sources said was due to concerns about pricing. Abu Dhabi Commercial Bank's (ADCB) move last Friday in selling its 25 per cent stake in RHBCap to sister company Aabar Investments at a hefty RM10.80 a share had set the valuation bar too high. At RM10.80, or 2.25 times RHBCap's book value, it was an almost 11 per cent premium over its share price of RM9.75 last Friday. CIMB and Maybank, which had separately been looking to do a deal involving share swaps, had each indicated that they would not overpay for RHBCap as it was not vital for their growth plans. "That sale (to Aabar) was expensive ... it didn't create any value and effectively killed prospects of a merger," a source close to the merger negotiations said. Maybank and CIMB each said, in stock exchange filings late yesterday, that they had ceased merger talks with RHBCap. The move, which the Singapore Business Times had reported about earlier yesterday citing sources, led to a steep drop in RHBCap's share price. It fell by 5.9 per cent, or 57 sen, to RM9.03, its lowest close in just over a month. It was the biggest loser in the stock market. "Based on our various discussions and our assessment of the present expectations of key stakeholders, we do not believe that we will be able to arrive at a value-creating merger," CIMB's chief executive officer Datuk Seri Nazir Razak said in a statement. He said given that merger negotiations are both resource-consuming and distracting for staff and stakeholders, the bank preferred not to prolong the discussions unnecessarily, allowing all parties to return to "business as usual" as soon as possible. Maybank, in its statement said: "In light of recent developments and following further deliberations, the board of directors of Maybank has decided not to pursue the possible merger at this juncture." Bank Negara Malaysia on May 31 given CIMB and Maybank permission to have those talks. The banks were to have put in their proposals to RHBCap on June 29, if things had proceeded as planned. A merger of RHBCap, the country's fifth largest lender, with either Maybank or CIMB would have created one of the largest banking groups in Southeast Asia. The move to end talks is a blow to Malaysia's ambition for the banking industry to consolidate further from eight entities now. Lim Sue Lin, an analyst with HwangDBS Vickers, doesn't discount the possibility of the two large banks re-visiting a merger with RHBCap further down the road. For now, the Aabar deal "probably drove away" the suitors, she said. HwangDBS maintained its buy call on RHBCap and said the stock is still fairly valued at RM10 a share, even without a prospective merger. "For them, it's business as usual ... they didn't need an MandA (merger and acquisition) to begin with," Lim remarked. RHBCap, which is 45 per cent owned by the Employees Provident Fund, took the latest news in its stride, saying it would continue to aim for sustainable growth and was confident of its ability to execute its plans and strategy. It noted that the group was able to hit record growth and profitability in recent years. "The group looks forward, with its head up high, to another year of good sustainable growth," it said in a statement. Maybank's stock fell by 2 sen to RM8.82, while that of CIMB fell by 4 sen to RM8.51.
Read More : http://www.btimes.com.my/articles/mabortf/Article/
Kuala Lumpur: The country's two largest banks, Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd, have each aborted plans to pursue a takeover of RHB Capital Bhd (RHBCap), a move sources said was due to concerns about pricing. Abu Dhabi Commercial Bank's (ADCB) move last Friday in selling its 25 per cent stake in RHBCap to sister company Aabar Investments at a hefty RM10.80 a share had set the valuation bar too high. At RM10.80, or 2.25 times RHBCap's book value, it was an almost 11 per cent premium over its share price of RM9.75 last Friday. CIMB and Maybank, which had separately been looking to do a deal involving share swaps, had each indicated that they would not overpay for RHBCap as it was not vital for their growth plans. "That sale (to Aabar) was expensive ... it didn't create any value and effectively killed prospects of a merger," a source close to the merger negotiations said. Maybank and CIMB each said, in stock exchange filings late yesterday, that they had ceased merger talks with RHBCap. The move, which the Singapore Business Times had reported about earlier yesterday citing sources, led to a steep drop in RHBCap's share price. It fell by 5.9 per cent, or 57 sen, to RM9.03, its lowest close in just over a month. It was the biggest loser in the stock market. "Based on our various discussions and our assessment of the present expectations of key stakeholders, we do not believe that we will be able to arrive at a value-creating merger," CIMB's chief executive officer Datuk Seri Nazir Razak said in a statement. He said given that merger negotiations are both resource-consuming and distracting for staff and stakeholders, the bank preferred not to prolong the discussions unnecessarily, allowing all parties to return to "business as usual" as soon as possible. Maybank, in its statement said: "In light of recent developments and following further deliberations, the board of directors of Maybank has decided not to pursue the possible merger at this juncture." Bank Negara Malaysia on May 31 given CIMB and Maybank permission to have those talks. The banks were to have put in their proposals to RHBCap on June 29, if things had proceeded as planned. A merger of RHBCap, the country's fifth largest lender, with either Maybank or CIMB would have created one of the largest banking groups in Southeast Asia. The move to end talks is a blow to Malaysia's ambition for the banking industry to consolidate further from eight entities now. Lim Sue Lin, an analyst with HwangDBS Vickers, doesn't discount the possibility of the two large banks re-visiting a merger with RHBCap further down the road. For now, the Aabar deal "probably drove away" the suitors, she said. HwangDBS maintained its buy call on RHBCap and said the stock is still fairly valued at RM10 a share, even without a prospective merger. "For them, it's business as usual ... they didn't need an MandA (merger and acquisition) to begin with," Lim remarked. RHBCap, which is 45 per cent owned by the Employees Provident Fund, took the latest news in its stride, saying it would continue to aim for sustainable growth and was confident of its ability to execute its plans and strategy. It noted that the group was able to hit record growth and profitability in recent years. "The group looks forward, with its head up high, to another year of good sustainable growth," it said in a statement. Maybank's stock fell by 2 sen to RM8.82, while that of CIMB fell by 4 sen to RM8.51.
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