AmResearch is maintaining its fair value for EON Capital at RM7.30 per share and expects Hong Leong Bank’s (HLBB) takeover to likely proceed.
On Tuesday, Aug 3 EON Cap announced the company has received a letter of approval from Bank Negara Malaysia stating the Minister of Finance had on July 26, granted the approval for EON cap to dispose of more than 5% interest in EON Bank Bhd and MIMB Investment Bank Bhd (an indirect unit of EON Cap).
MoF also granted approval for EON Cap to enter into an agreement or arrangement with Hong Leong Bank (HLBB) which will result in the change of control of EON Bank Bhd and MIMB Investment Bank Bhd.
MoF also granted approval for the disposal of shares in EON Cap Islamic Bank Bhd to HLBB.
Separately, HLBB announced it was granted similar approvals (to acquire EON Cap’s subsidiaries. HLBB also announced that it has been granted approval to transfer the banking operations of EON Bank to HLBB, as well as transfer the banking operations of EON Cap Islamic to HLBB.
MoF also allowed EON Bank and EON Cap Islamic to continue to use the word “bank” in their respective names for a period of one year from the date of the transfer of their banking operations.
However, HLBB must finalise the position of MIMB by Dec 31, 2010 in line with Bank Negara’s policy which prohibits a domestic banking group from holding two investment banking licences.
AmResearch said the approvals by Bank Negara and MoF were originally anticipated by mid-October 2010, after EON Cap’s EGM on Aug 19, 2010.
“Thus, if shareholders vote for the go-ahead for the takeover at the EGM, EON Cap’s board of directors is now empowered to decide whether or not to accept the offer from HLBB,” the research house said.
However, this is subject to a final decision of the court on the petition filed by Primus (Malaysia) Sdn Bhd. The High Court has fixed the case management date on Aug 17, 2010, and trial dates on Sept 20-23 and 27-28.
The second condition is that the Securities Commission approval for the proposed change in ultimate shareholders of MIMB, being a holder of a Capital Market Services Licence issued by the SC.
“We maintain our view the takeover will likely proceed pending a favourable outcome to the defendants,” said AmResearch.
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