MERGER VALUATIONS SEEM FAIR, BUT WILL AABAR ACCEPT? Valuations in the proposed mega bank merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) were more or less in line with expectations. But the question is, will RHB’s Middle Eastern investor find it compelling enough to accept? Aabar Investments PJS, with its 21.2% stake in RHB, could scuttle the merger should Bursa Malaysia rule the three parties’ common major shareholder — the Employees Provident Fund (EPF) — cannot vote on the deal on account of the move being deemed a conflict of interest. The deal has been structured such that RHB will be the acquiring entity. It will acquire larger rival CIMB’s assets and liabilities via a share swap at an exchange ratio of 1.38 — meaning that CIMB shareholders will get one RHBCap share for every 1.38 CIMB shares they hold. As the acquirer, RHB only needs a 50%-plus-one-share approval for the deal to go through. If it were the selling party, it would have needed a 75% vote. Under the proposed structure, if the EPF is allowed to vote with its 41.5% stake in RHB — and if it is for the deal — the merger will be pretty much in the bag. However, if Bursa rules that the EPF must abstain from voting, then Aabar will hold a 36.2% vote, which means that if it votes against a deal, it will be tougher — though not impossible — for the merger to go through. Pick up a copy of The Edge Malaysia at all good newsstands and bookstores OR visitbit.ly/subscribetheedgemalaysia to get the weekly issue and more on your tablet or PC. You can view our Editors picks from this weeks issue, watch our latest videos and read selected articles for free at bit.ly/TEMTheEdgeHub.
Posted on: Tue, 14 Oct 2014 07:35:00 +0000
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