EON Capital to Become A Takeover Target Now?

Pin It

Mar 10 2007
Linked In
There’re obvious and strong reasons why EON Capital Berhad (KLSE: EONCAP, stock-code 5266) showed such determination to acquire Rashid Hussain Bhd (KLSE : RHB, stock-code 1309) with its’ willingness to offer the highest price for RHB and RHB Capital Berhad (KLSE: RHBCAP, stock-code 1066) stock. It needs to become one of the biggest financial entity in Malaysia if it needs to maintain its’ identity in the next chapter of banking consolidation.

Despite its’ highest offer, it lost (do you ever think EON Capital has any chance since the beginning anyway?) to not a better competitor but to a government-backed entity. Nowhere in the globe can you see a business company able to beat a government especially when politic and business exists within an area with such a grey area. You might not realize it but the money used by Malaysia’s state pension fund Employees Provident Fund (EPF) to force its’ body on the RHB belongs to the members who contributed to the fund. No doubt the clear winner is Utama Banking Group (KLSE: UBG, stock-code 6831) who walks away with billions of dollars to the bank.

Now that EON Capital lost the bid, it better start thinking and preparing of a defensive plan since it might be a target of a takeover. Business Times thinks so when it quoted some analysts who think the seventh largest bank might become a M&A target. EON Capital’s values are its’ 130 EON Bank branches nationwide and its’ monopoly in car loans section especially the national cars controlled by Proton Holdings Bhd (KLSE: PROTON, stock-code : 5304).

It’s major shareholder, DRB-HICOM Berhad (KLSE: DRBHCOM, stock-code : 1619) is said to be eager to cash out and received the approval from Malaysia’s central bank, Bank Negara, recently to do so. DRB-HICOM which holds about 20% of EON Capital is in talks with US private equity firm Newbridge Capital. EPF also has indicated its’ interest to sell its’ 8.4 percent stake in EON Capital.

There’s also a possibility that EPF might use RHB Capital as the vehicle to reverse takeover EON Capital. And when that happens, it will be interested to see if there’re any other challengers who is big and powerful enough to give EPF a lesson (which I doubt so for obvious reason). With its’ clean-bill, EON Capital’s consolation would probably be the option of asking a higher price for its stake.

# TIP: With new speculation of EON Capital becoming a potential takeover, its’ stock price will surely be chase-up. Investing on the stock might – just might return some decent profit for you.

Other Articles That May Interest You …

Pin It

FinanceTwitter SignOff
If you enjoyed this post, what shall you do next? Consider:

Like FinanceTwitter Tweet FinanceTwitter Subscribe Newsletter   Leave Comment Share With Others


Add your comment now.

Leave a Reply


(required)(will not be published)