Barefoot Investor: Maybank plans RM4.26b acquisition of Kim Eng

MALAYAN BANKING BHD is acquiring a strategic 44.6% stake in Kim Eng Holdings Ltd at S$3.10 per share, amounting to S$798 million (RM1.9 billion) with a view to takeover the Singapore–based broking firm.

In a statement Thursday, Jan 6, Maybank said it had via its wholly-owned subsidiary, Aseam Credit Sdn Bhd (ACSB), entered into conditional sale and purchase agreements (CSPA) with each of Kim Eng’s chairman and chief executive officer Ronald Anthony Ooi Thean Yat and Yuanta Securities Asia Financial Services Ltd (Yuanta) to acquire 15.4% and 29.2% stakes in Kim Eng respectively.

The proposed acquisition will see Maybank emerge as the single largest shareholder in Kim Eng with an intention to acquire the remaining 55.4% of Kim Eng shares and delist the company, it said.

In accordance with the Singapore Code on Take-overs and Mergers, Maybank will be required, upon satisfaction of the conditions set forth in the CSPAs, to make a mandatory offer for all shares not already owned by Maybank, it said.

Maybank said the total estimated purchase consideration for 100% of Kim Eng would be S$1.79 billion (RM4.26 billion).

The lender said that as of Sept 30, 2010, Kim Eng’s total assets and shareholders’ equity amounted to S$2.697 billion and S$938 million, respectively.

The acquisition price represented a multiple of 1.91 times Kim Eng’s reported book value as of Sept 30, 2010, and premia of 15% to the last closing price of S$2.70 and 28% respectively to the one-month volume weighted average price of S$2.42, it said.

“Kim Eng, with its regional platform and well-entrenched leadership position in various markets, represents a unique opportunity for Maybank.

“The proposed transaction is consistent with Maybank’s strategy of developing its pan-Asean financial services platform, and accelerates the build-out of its investment banking and equities platform in the region,” said the bank.

Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor said the move was great leap forward for Maybank so early in the new year.

“Kim Eng is a perfect complement to our existing strengths in investment banking and the equities market. It gives us the immediate platform to aggressively build up our global wholesale banking capabilities in Asean and beyond.

“Our combined synergies signal interesting times for us in the region this new year and long term. Immediately, Kim Eng gives us entry into Thailand. We are excited over the tremendous opportunity we will have to grow our business there. We welcome the Kim Eng leadership team and employees into the Maybank Group,” he said.

Maybank president and CEO Datuk Seri Abdul Wahid Omar said this transaction represented an important milestone in the expansion of Maybank’s investment banking franchise, and addresses an important gap in its Asean footprint.

“Kim Eng’s market leadership, complementary geographic footprint, product offerings and distribution capability, combined with our commercial banking franchise, provides immense potential for synergies,” he said.

The transaction is subject to approval from, among others, Bank Negara Malaysia and the Monetary Authority of Singapore.

Maybank Investment Bank and Nomura Singapore Ltd. are joint financial advisors to Maybank on the transaction.

Ooi, who will continue to lead Kim Eng as CEO post the transaction said the firm looked forward to being part of Maybank.

“This transaction allows us to take our business to the next level, with the support of Maybank’s strong balance sheet and well-entrenched client relationships,” he said. (


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