Happy ending to a long Hong Leong-EONCap courtship

But first up on Hong Leong's agenda is to integrate the operations of both banks. This won't be an easy task.

THERE would have been more than a few sighs of relief when the highly-anticipated "marriage" finally took place in Malaysia last Friday.

Hong Leong Bank Bhd, the country's sixth largest banking group, finally tied the knot with EON Capital Bhd (EONCap), after 15 long months of courtship and much resistance from the latter's biggest shareholder.

Doubtless, there will be cheer from investors who had been put through a long nail-biting period of will-they-won't-they speculation. Uncertainty is, after all, the biggest bane of investors.

While the union of Hong Leong and EONCap was held with far less fanfare than that of the young royals in the UK a week earlier, the dramatic events leading up to it certainly provided the press with much fodder to make it an affair to remember.

It will go down in history as the longest banking takeover in the banking sector here.

A summary of news coverage on EONCap over the 15-month period would reveal sensational tales of feuding shareholders, boardroom battles and revamps as a result of the takeover offer.

The drama went up a notch when a RM1.1 billion law suit was brought against the bank and its directors by its Hong Kong-based shareholder, Primus Pacific Partners, mid last year in a desperate attempt to prevent the RM5.06 billion takeover. Primus stood to make a hefty loss on investment from the deal.

All the while, there were rumours of other potential suitors for EONCap, although, as it turned out, none openly came out about their interest.

The play of events would certainly have put off a less ardent suitor, but Hong Leong, owned by shrewd businessman Quek Leng Chan, remained steadfast and cool throughout, even making a few uncharacteristic goodwill moves like upping its offer price from RM4.9 billion to RM5.06 billion and eventually allowing EONCap to make a dividend payout to sweeten the deal.

In the end, its willingness to be a "Waity-Katie"- what the British media dubbed Kate Middleton on account of her having waited some seven years before officially snagging her prince - appears to have paid off.

Its union with EONCap has already helped it unseat rival RHB Capital Bhd as Malaysia's fourth largest banking group, of eight currently, with about RM140 billion in assets. Being bigger puts it on stronger footing to compete both at home and abroad. Hong Leong is also keen to undertake more mergers and acquisitions to fulfill its growth ambitions in Asia.

But first up on its agenda is to integrate the operations of both banks. This won't be an easy task. It never is in any merger but Hong Leong will have to get its act together quickly as Malaysia is progressively opening its door to more foreign banks, heating up competition in the industry.

It needs to deal with close to 12,000 staff, over 300 branches and different IT systems, while keeping customers of both banks happy.

In the last banking takeover in the country, that of Southern Bank Bhd by Bumiputra-Commerce Holdings Bhd (now known as CIMB Group Holdings Bhd) in 2006, integration of operations took seven months, making it one of the most efficient and quickest exercises in the industry.

One wonders if Hong Leong will be able to top that. - By Adeline Paul Raj of btimes.com.my