CIMB, Malaysia’s second-biggest lender, RHB Capital and Malaysia Building Society asked that their shares be suspended today pending a material announcement, the three said in separate statements late yesterday. The lenders, which have a combined market value of about $27 billion, announced plans for the deal in July and entered a 90-day exclusive agreement to negotiate and finalize the price and structure of the merger.
CIMB and RHB Capital plan to structure a deal between them as a so-called reverse takeover, with RHB issuing new shares to acquire its larger competitor, people familiar with the matter said last month. MBSB’s portion of the deal will involve cash and shares, the Star newspaper reported today, citing people it didn’t identify.
Singapore’s DBSThe combined entity would be smaller than Singapore’s DBS Group Holdings Ltd., Southeast Asia’s biggest bank, which has a market capitalization of about $36 billion and more than $300 billion of assets.
Shares of CIMB were unchanged at 6.98 ringgit yesterday, valuing the Kuala Lumpur-based company at 58.2 billion ringgit. The stock has fallen 3.6 percent since the merger was first announced on July 10.
RHB closed 0.4 percent higher at 8.70 ringgit, with a market value of 22.4 billion ringgit, while Malaysia Building Society (MBS) dropped 2.1 percent to 2.37 ringgit, paring its value to 6.4 billion ringgit.
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 percent 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 the stake from Abu Dhabi Commercial Bank PJSC in 2011, the Malaysian Insider reported on July 16, citing unnamed people. The sheikhdom also sent a special envoy to the Malaysian government to convey unhappiness over the merger, the same people said.
Aabar paid 10.80 ringgit per share, when RHB was the target of a takeover battle between Malayan Banking and CIMB.
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