Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
Research House: OSK
Company Name: HONG LEONG BANK BHD
Research House: OSK
Hong Leong Bank Bhd, Malaysia’s sixth-biggest lender by market value, agreed to sweeten its RM5.06 billion (US$1.7 billion) takeover offer of smaller rival EON Capital Bhd by allowing it to pay a dividend to existing shareholders as part of the deal, a person familiar with the matter said.
EON’s board met last night to approve a dividend payment of about 40 sen per share after obtaining Hong Leong’s agreement following several rounds of negotiations, said the person, who asked not to be identified because the process is private.
Shares of EON and Hong Leong Bank were suspended on the Kuala Lumpur stock exchange today, pending an announcement.
Primus Pacific Partners Ltd, a Hong Kong-based investment fund which is EON’s biggest shareholder with a 20.2 per cent stake, has opposed the deal after paying RM9.55 a share for its interest in 2008. That’s 31 per cent more than Hong Leong’s all-cash offer, which equals to RM7.30 per share. While the takeover price remains the same, a one-off dividend would partially cushion this shortfall.
EON’s minority shareholders voted in favor of the takeover at a meeting last year. Primus then sued the bank and nine of its directors, claiming they had exceeded their powers and breached fiduciary and statutory duties in allowing the sale vote to proceed. In the suit filed through its local unit in June, the fund sought RM1.11 billion in damages if the transaction went ahead at the current offer price.
Court Ruling
A Malaysian court yesterday ruled that the planned acquisition by billionaire Quek Leng Chan’s Hong Leong is legal, thwarting Primus’s attempt to block the sale. There was no answer at Quek’s office when phoned today for comment before normal office hours.
With the court ruling, “the way is paved for a re-rating” for Hong Leong Bank shares, OSK Research Sdn Bhd analysts led by Chris Eng wrote in a report today. “The deal will be value accretive on all fronts,” according to the report.
Hong Leong’s stock rating was raised to “buy” from “trading buy” and its fair value increased to RM11.60 from RM9.86, Eng said. An EON takeover would help Hong Leong create the Southeast Asian nation’s fourth-biggest banking group by assets, he said.
‘Buying Time’
“The petitioner’s motive is purely to buy time in order to secure another bidder who’d pay more than RM7.30 per share,” Judicial Commissioner Varghese George Varughese said when delivering his judgment in a high court in Malaysia’s northern Penang state. “Corporate democracy must prevail.”
China Construction Bank Corp, the world’s second-largest lender by market value, expressed interest this month in buying EON, two people with knowledge of the matter said on April 26.
The Beijing-based bank sent a letter to Malaysia’s central bank asking for permission to start talks with some or all of the major shareholders of EON, hoping to secure the highest possible equity ownership in the Malaysian lender, according to the people who asked not to be identified as the information was confidential.
EON shares rose to 0.7 per cent to close at RM7.23 ringgit yesterday in Kuala Lumpur trading, paring an earlier 3.1 per cent gain after this afternoon’s verdict. Hong Leong Bank Bhd. rose 0.6 per cent to RM10.40, while its parent Hong Leong Financial Group Bhd jumped 4 per cent to a record RM9.90. -- Bloomberg
EON’s board met last night to approve a dividend payment of about 40 sen per share after obtaining Hong Leong’s agreement following several rounds of negotiations, said the person, who asked not to be identified because the process is private.
Shares of EON and Hong Leong Bank were suspended on the Kuala Lumpur stock exchange today, pending an announcement.
Primus Pacific Partners Ltd, a Hong Kong-based investment fund which is EON’s biggest shareholder with a 20.2 per cent stake, has opposed the deal after paying RM9.55 a share for its interest in 2008. That’s 31 per cent more than Hong Leong’s all-cash offer, which equals to RM7.30 per share. While the takeover price remains the same, a one-off dividend would partially cushion this shortfall.
EON’s minority shareholders voted in favor of the takeover at a meeting last year. Primus then sued the bank and nine of its directors, claiming they had exceeded their powers and breached fiduciary and statutory duties in allowing the sale vote to proceed. In the suit filed through its local unit in June, the fund sought RM1.11 billion in damages if the transaction went ahead at the current offer price.
Court Ruling
A Malaysian court yesterday ruled that the planned acquisition by billionaire Quek Leng Chan’s Hong Leong is legal, thwarting Primus’s attempt to block the sale. There was no answer at Quek’s office when phoned today for comment before normal office hours.
With the court ruling, “the way is paved for a re-rating” for Hong Leong Bank shares, OSK Research Sdn Bhd analysts led by Chris Eng wrote in a report today. “The deal will be value accretive on all fronts,” according to the report.
Hong Leong’s stock rating was raised to “buy” from “trading buy” and its fair value increased to RM11.60 from RM9.86, Eng said. An EON takeover would help Hong Leong create the Southeast Asian nation’s fourth-biggest banking group by assets, he said.
‘Buying Time’
“The petitioner’s motive is purely to buy time in order to secure another bidder who’d pay more than RM7.30 per share,” Judicial Commissioner Varghese George Varughese said when delivering his judgment in a high court in Malaysia’s northern Penang state. “Corporate democracy must prevail.”
China Construction Bank Corp, the world’s second-largest lender by market value, expressed interest this month in buying EON, two people with knowledge of the matter said on April 26.
The Beijing-based bank sent a letter to Malaysia’s central bank asking for permission to start talks with some or all of the major shareholders of EON, hoping to secure the highest possible equity ownership in the Malaysian lender, according to the people who asked not to be identified as the information was confidential.
EON shares rose to 0.7 per cent to close at RM7.23 ringgit yesterday in Kuala Lumpur trading, paring an earlier 3.1 per cent gain after this afternoon’s verdict. Hong Leong Bank Bhd. rose 0.6 per cent to RM10.40, while its parent Hong Leong Financial Group Bhd jumped 4 per cent to a record RM9.90. -- Bloomberg
No comments:
Post a Comment