Maybank currently does not have stockbroking and investment banking operations outside Malaysia.
Taking over the Singapore-listed regional stockbroker would immediately give it a platform to do such business in Singapore, Thailand, Indonesia and the Philippines.
Kim Eng, which is ranked among the top five broker in all those markets, also has an active presence in Vietnam, Hong Kong, New York, London and India.
"We're starting 2011 with a bang. The purchase will accelerate our investment banking and equities build-out, in line with Maybank's regional aspirations," president and chief executive officer (CEO) Datuk Seri Abdul Wahid Omar said at a press briefing yesterday.
Kim Eng, which reported a net profit of S$50.2 million for the first nine months last year, makes the bulk of its money from stockbroking.
Wahid said there would be no staff layoffs post-merger as Maybank and Kim Eng made a good fit with no overlap in operations.
"Kim Eng's market leadership, complementary geographic footprint, product offerings and distribution capability, combined with our commercial banking franchise, provides immense potential for synergies," he added.
Maybank will first take up a 44.6 per cent stake in Kim Eng from two parties - Taiwanese firm Yuanta Securities Asia Financial Services Ltd and Kim Eng's chairman and CEO Ronald Anthony Ooi Thean Yat - for S$798 million, or S$3.10 a share.
If successful, it will emerge as the single largest shareholder in Kim Eng, and will then make a general offer for the rest of the shares it does not own at the same price of S$3.10 each.
It intends to delist Kim Eng and retain the latter's current management.
On whether he expects to face opposition from Kim Eng's 29 per cent shareholder Mitsubishi UFJ Morgan Stanley Securities Co, Wahid said Maybank would soon engage with the latter to find out its intentions.
"There has been some engagement, but it hasn't been finalised," he said, adding that the bank had no plans to raise the offer price, which he deems "fair".
The offer is at a 15 per cent premium over Kim Eng's last traded market price. It is also 28 per cent higher than its one-month volume-weighted average market price of S$2.42.
The offer, at a multiple of 1.91 times Kim Eng's reported book value as at end-September last year, is slightly pricey but it is justified considering its strong regional platform and top rankings, said a banking analyst from RHB Research.
Wahid said Maybank would use internal funds and may also sell Singapore-dollar debt to finance the deal.
It may have to spend up to RM500 million more to undertake a "downstream general offer" of Kim Eng's listed entities in Thailand and the Philippines, depending on how its discussions with authorities in those countries go, he added.
Maybank expects to wrap up the deal, which is being jointly advised by Maybank Investment Bank and Nomura Singapore Ltd, by the end of May this year.
It will contribute positively to group earnings from the next financial year ending June 30, 2012 onwards, Wahid said.
Ooi has agreed to stay on as CEO at Kim Eng for at least three years, overseeing the group's integration and business plans.- by Adeline Paul Raj, btimes.com.my.
No comments:
Post a Comment