HLBB still committed to EONCap deal

Hong Leong Bank Bhd (HLBB) is still committed to its proposed RM5.06 billion takeover of EON Capital Bhd (EONCap), despite delays by the latter in obtaining shareholder approval at an EGM.

HLBB group managing director and chief executive Yvonne Chia said the bank had already obtained regulatory approvals from the Ministry of Finance to proceed with the deal and that indicated the seriousness of HLBB in acquiring the entire assets and liabilities of EONCap.

“A lot of time has been taken in planning the potential integration of these two banks. A lot of time has also been spent by our shareholders and board of directors on this deal.

“Of course we are committed and we will respect the due process that EONCap needs to undertake,” she told reporters at a press conference on HLBB’s results for its fourth quarter ended June 30, 2010 (4QFY10) and the full fiscal year (FY10).

In an announcement to Bursa Malaysia yesterday, HLBB said it would allow EONCap to convene an EGM to obtain shareholders’ approval for the proposed takeover in the targeted bank by Sept 30. The earlier deadline for EONCap to convene its EGM in relation to the proposed deal was set for today.

HLBB’s deadline for EONCap to obtain all relevant approvals by Nov 30 remained unchanged.

EONCap on Wednesday had announced that its EGM to table resolutions involving the proposed takeover deal by HLBB, which was to have been held yesterday, would be postponed to a later date.

The move came following the withdrawal of a lawsuit against EONCap by minority shareholder Shu Pei Huang. Shu, who owns 200 shares in EONCap, filed a lawsuit against the bank last week, to declare the then impending EGM as invalid given that the notice had not fully adhered to the company’s Articles of Association.

Subsequently, EONCap also said a fresh notice for the resolutions would be reissued and the planned EGM would be convened at a future date.

Similarly, HLBB also announced yesterday that it would seek its shareholders’ consent to adjourn its upcoming EGM, earlier scheduled for Monday, to a later date. The EGM was called to consider the resolutions in respect of the proposed acquisition and proposed rights issue to raise RM1.6 billion.

HLBB’s proposed takeover of EONCap has been in the making since last December, having faced several obstacles, including  resistance from the latter’s single largest shareholder in Hong Kong’s Primus Pacific Partners Ltd, which has a 20.2% stake.

HLBB last year also was in the running to bid for Thailand’s Siam City Bank, but had pulled out of the race to focus on its proposed takeover of EONCap.

Four EONCap directors, including the chairman, resigned after new appointments were made to the board following their opposition to the proposed takeover by HLBB on grounds of a “significantly” undervalued offer. The new board members were aligned to parties supporting the HLBB deal.

HLBB had originally offered to undertake the exercise at RM4.92 billion cash or RM7.10 per share, valuing the deal at 1.39 times of EONCap’s book value. The offer was subsequently revised upwards to RM5.06 billion or RM7.30 per share, valuing it at 1.43 times.

Thereafter, Primus filed a suit against certain shareholders and directors and EONCap seeking various court declarations and orders as well as some RM1.12 billion in damages, should HLBB succeed in acquiring EONCap’s assets and liabilities for RM7.30 per share.


This article appeared in The Edge Financial Daily, August 20, 2010.