Sunday, December 20, 2009

RM1.85b tag for EONCap (RM6.58) stake

Singaporean Rin Kei Mei and Tan Sri Tiong Hiew King, who collectively hold a 32.57 per cent of EONCap, are willing to sell to Hong Leong Bank, says a BNP analystTwo major shareholders of EON Capital Bhd (EONCap) (5266) are willing to sell their shares to Hong Leong Bank Bhd (HLB) at RM8.20 a share, according to an analyst from BNP Paribas.

That price would be a premium of almost 25 per cent over EONCap's last closing price of RM6.58 on Thursday, giving the group a total value of RM5.68 billion. Singaporean Rin Kei Mei and Tan Sri Tiong Hiew King hold a collective 32.57 per cent of EONCap and the two are willing to sell, BNP analyst Ng Wee Siang said in a note reported by Reuters.

At RM8.20 apiece, HLB would pay about RM1.85 billion for that block. HLB could then push for EONCap to sell its assets, to kickstart a merger between the two banking groups. An asset sale would only require the approval of shareholders with a simple majority of 50 per cent plus one share, Ng said. Ng thinks that other big shareholders like the Employees Provident Fund and Khazanah Nasional Bhd, who hold another 20.7 per cent collectively, are likely to support the deal as their entry investment cost was below RM6 a share.

BNP has raised its target price for EONCap to RM8.30 as it thinks that the takeover of the group would be done at that price. On Thursday, HLB, currently the sixth biggest in terms of assets, received Bank Negara Malaysia's approval to start talks with "certain shareholders" of EONCap, which is ranked seventh.

"(The talks are) for a potential acquisition of the assets and liabilities, including equity interests in EONCap," HLB said in a statement to Bursa Malaysia yesterday. A combination of HLB and EONCap would create a group with total assets of RM121.41 billion. This means that HLB would be able to leapfrog RHB Capital Bhd, currently fourth biggest with assets of RM110.5 billion.


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