Bank Negara has informed Affin in a letter that day that it was 'unable' to consider the bank's application to start talks with EONCap and its major shareholders.
Bank Negara Malaysia yesterday put paid to Affin Holdings Bhd's (5185) plans to make a competing takeover bid for bigger banking group EON Capital Bhd (EONCap).
This leaves the path clear for Hong Leong Bank Bhd, the country's sixth largest lender, to see through its existing RM5.06 billion offer for EONCap, analysts said.
Affin, in a stock exchange filing late yesterday, said Bank Negara had informed it in a letter that day that it was "unable" to consider its application to start negotiations with EONCap and its major shareholders.
Affin, which had written in on May 4 for the central bank's approval, did not provide further details.
"With Affin out of the way, it all boils down to EONCap's shareholders now whether they want to accept the Hong Leong offer," said David Chong, a banking analyst at RHB Research.
EONCap has yet to set a date for an extraordinary general meeting (EGM) as it is waiting for Bursa Malaysia to approve its circular to shareholders on the offer.
It is believed that Bursa's approval may come within this week, which means an EGM could be held in early July.
A source familiar with the matter said it was unclear at this stage if Primus Pacific Partners - the bank's single biggest shareholder which opposes the Hong Leong takeover - will resort to legal action or other delay tactics to stop an EGM from taking place.
Complicating matters is that Primus is required to cut its 20.2 per cent stake in the banking group to 15 per cent before the end of this month.
This was a condition set by Bank Negara when the Hong Kong-based investment firm first bought into the group in 2008, sources said.
Primus yesterday declined to comment on this.
Still, analysts said Primus can ask the central bank for more time to pare down its stake given recent developments.
"Having a new shareholder emerge now would just complicate things," one remarked.
Primus had bought its stake from DRB-HICOM Bhd in early 2008 for RM1.34 billion, or RM9.55 a share. This was a hefty premium of over 50 per cent to EONCap's market price at the time.
It is this high entry cost that has Primus resisting the Hong Leong cash offer of RM7.30 a share for the smaller bank's assets and liabilities.
Primus would have preferred a bid by Affin, which was reported to have planned to include an element of equity in its takeover offer.
EONCap's board of directors, with the exception of Ng Wing Fai, Primus' managing director, feel that Hong Leong's offer of RM7.30 a share is credible and in the company's best interest.
Its independent adviser Credit Suisse believes that the offer is unfair from a financial perspective.
-Bank Negara Malaysia yesterday put paid to Affin Holdings Bhd's (5185) plans to make a competing takeover bid for bigger banking group EON Capital Bhd (EONCap).
This leaves the path clear for Hong Leong Bank Bhd, the country's sixth largest lender, to see through its existing RM5.06 billion offer for EONCap, analysts said.
Affin, in a stock exchange filing late yesterday, said Bank Negara had informed it in a letter that day that it was "unable" to consider its application to start negotiations with EONCap and its major shareholders.
Affin, which had written in on May 4 for the central bank's approval, did not provide further details.
"With Affin out of the way, it all boils down to EONCap's shareholders now whether they want to accept the Hong Leong offer," said David Chong, a banking analyst at RHB Research.
EONCap has yet to set a date for an extraordinary general meeting (EGM) as it is waiting for Bursa Malaysia to approve its circular to shareholders on the offer.
It is believed that Bursa's approval may come within this week, which means an EGM could be held in early July.
A source familiar with the matter said it was unclear at this stage if Primus Pacific Partners - the bank's single biggest shareholder which opposes the Hong Leong takeover - will resort to legal action or other delay tactics to stop an EGM from taking place.
Complicating matters is that Primus is required to cut its 20.2 per cent stake in the banking group to 15 per cent before the end of this month.
This was a condition set by Bank Negara when the Hong Kong-based investment firm first bought into the group in 2008, sources said.
Primus yesterday declined to comment on this.
Still, analysts said Primus can ask the central bank for more time to pare down its stake given recent developments.
"Having a new shareholder emerge now would just complicate things," one remarked.
Primus had bought its stake from DRB-HICOM Bhd in early 2008 for RM1.34 billion, or RM9.55 a share. This was a hefty premium of over 50 per cent to EONCap's market price at the time.
It is this high entry cost that has Primus resisting the Hong Leong cash offer of RM7.30 a share for the smaller bank's assets and liabilities.
Primus would have preferred a bid by Affin, which was reported to have planned to include an element of equity in its takeover offer.
EONCap's board of directors, with the exception of Ng Wing Fai, Primus' managing director, feel that Hong Leong's offer of RM7.30 a share is credible and in the company's best interest.
Its independent adviser Credit Suisse believes that the offer is unfair from a financial perspective.
- Business Times
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