It is almost certain. Hong Leong Bank is on course to take over EON Bank thus creating the 4th largest Malaysian bank. Expected assets: RM110.5 billionHong Leong Bank has received Bank Negara Malaysia’s (BNM) permission to begin negotiations with “certain shareholders” of EON Capital to acquire an interest. EON Capital, which is listed, wholly owns EON Bank.
KUALA LUMPUR, Dec 22 — A merger between Hong Leong Bank and EON Bank to create Malaysia’s fourth largest bank with assets of RM110.5 billion could be in the offing.
Late last week, Hong Leong Bank told the stock exchange that it had received Bank Negara Malaysia’s (BNM) permission to begin negotiations with “certain shareholders” of EON Capital to acquire an interest. EON Capital, which is listed, wholly owns EON Bank.
EON Capital’s largest shareholders are businessman Rin Kei Mei and Sarawak billionaire Tiong Hiew Khiing, who collectively hold 33.2 per cent of the financial firm.
Other shareholders include Hong Kong-based investment fund Primus Pacific Partners (20.2 per cent), the Employees Provident Fund (12.1 per cent) and state investment agency Khazanah Nasional (10 per cent).
In a note on Friday, BNP Paribas analyst Ng Wee Siang said that both Rin and Tiong were willing to sell their shares at RM8.20 apiece.
His prediction was denied by both men yesterday, but they stopped short of saying they would not consider selling at all.
There is no certainty, however, that a deal will be struck as this isn’t the first time Hong Leong Bank has tried for EON Capital. A previous attempt several years ago had stalled over pricing so it could happen again as tycoon Quek Leng Chan, the controlling shareholder of Hong Leong, isn’t known to pay more than what he considers a fair price.
Even so, the move towards merger reflects the central bank’s desire to winnow the Malaysian banking sector to a few large banks, the better to withstand increased foreign competition starting next year. Currently, Malaysia has eight local banks.
It could also reflect Quek’s increased appetite for acquisitions. He recently announced that he’d amassed an 8 per cent interest in Bank of East Asia, while his Hong Leong group has begun making aggressive moves into China.
His push for merger is likely to be supported by both Khazanah and the Employees Provident Fund, which are likely to side with the central bank’s stand.
For its part, Primus isn’t likely to sell out to Quek. The investment fund had bought into EON Capital at a jaw-dropping RM9.55 apiece, a price that Quek would probably consider astronomical.
Instead, Primus might back Quek’s buyout of Rin and Tiong. It is widely known that Ng Wing Fai, Primus’ managing director, does not see eye to eye with the 70-something Rin on issues of capital management.
Still, the fact that Quek is interested in EON Capital drove the firm’s shares higher yesterday. The stock closed 4.6 per cent higher at RM6.88 apiece. — Business Times Singapore
EON Capital’s largest shareholders are businessman Rin Kei Mei and Sarawak billionaire Tiong Hiew Khiing, who collectively hold 33.2 per cent of the financial firm.
Other shareholders include Hong Kong-based investment fund Primus Pacific Partners (20.2 per cent), the Employees Provident Fund (12.1 per cent) and state investment agency Khazanah Nasional (10 per cent).
In a note on Friday, BNP Paribas analyst Ng Wee Siang said that both Rin and Tiong were willing to sell their shares at RM8.20 apiece.
His prediction was denied by both men yesterday, but they stopped short of saying they would not consider selling at all.
There is no certainty, however, that a deal will be struck as this isn’t the first time Hong Leong Bank has tried for EON Capital. A previous attempt several years ago had stalled over pricing so it could happen again as tycoon Quek Leng Chan, the controlling shareholder of Hong Leong, isn’t known to pay more than what he considers a fair price.
Even so, the move towards merger reflects the central bank’s desire to winnow the Malaysian banking sector to a few large banks, the better to withstand increased foreign competition starting next year. Currently, Malaysia has eight local banks.
It could also reflect Quek’s increased appetite for acquisitions. He recently announced that he’d amassed an 8 per cent interest in Bank of East Asia, while his Hong Leong group has begun making aggressive moves into China.
His push for merger is likely to be supported by both Khazanah and the Employees Provident Fund, which are likely to side with the central bank’s stand.
For its part, Primus isn’t likely to sell out to Quek. The investment fund had bought into EON Capital at a jaw-dropping RM9.55 apiece, a price that Quek would probably consider astronomical.
Instead, Primus might back Quek’s buyout of Rin and Tiong. It is widely known that Ng Wing Fai, Primus’ managing director, does not see eye to eye with the 70-something Rin on issues of capital management.
So, it looks like Hong Leong Bank has come a long way since the days when it was only a puny finance company!
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