CIMB upbeat on merger nod

1 December, 2014
As appeared in The Yahoo News

THE proposed merger of CIMB Group Holdings Bhd, RHB Capital Bhd (RHBCap) and Malaysia Building Society Bhd (MBSB) to create Malaysia’s largest bank will go through with or without majority shareholder Employees Provident Fund’s (EPF) participation at an upcoming extraordinary general meeting.

CIMB Group chairman Datuk Seri Nazir Razak said he was confident that all parties would secure the shareholders’ endorsement when the business plan was presented at the shareholders’ meeting.

“This merger, if it goes through, will stand on its merit and we will put forward the case to get shareholders’ endorsement.

“We think we will get it through with or without EPF’s vote,” Nazir said on the sidelines of the launch of the Lifting-the-Barriers Reports by Asean Business Club, here, yesterday.

The three banks announced their amalgamation plan in June, which is expected to value more than RM94 billion.

EPF is not allowed to vote by Bursa Malaysia as it is deemed as an interested party and it is now appealing against the decision.

EPF has about 14.5 per cent stake in CIMB, 41 per cent in RHBCap and 65 per cent in MBSB.

EPF was barred from voting on the mega merger on October 22 after failing in its argument that the interests of its 14 million members were at stake.

Nazir said CIMB would put forward a merger proposal which was compelling enough for shareholders to give their vote of confidence.

He said the proposed merger would stand on its own merits.

“At the end of the day, it is a merger with no cash but a share swap and in any fundamental case, we have to see the value of the resulted entity.

“We have to convince shareholders that the merger of two or three banks will be better than the business we have today.”

Meanwhile, Nazir said the merger was targeted to be completed by the first quarter of next year and was progressing to the next phase with ongoing discussions on synergies, with all parties conducting due diligence on schedule.

Under the merger, shareholders of CIMB Group will end up with a 70 per cent controlling stake in the enlarged entity, while RHBCap shareholders will own the remaining 30 per cent.

The merger will first see a share swap between CIMB Group and RHBCap at an exchange ratio of 1.38, or one RHBCap share for 1.38 CIMB Group share.

CIMB Islamic will buy the assets and liabilities of RHB Islamic for RM4.15 billion, or RM3.53 per share.

Concurrently, CIMB Islamic will buy MBSB, and together with RHB Islamic, will merge to form a mega Islamic bank.

CIMB Group and MBSB will be delisted from Bursa Malaysia and the merged entity is expected be a major Asean financial powerhouse.