UBG Aye to EPF despite Higher Offer from EON Capital

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Mar 08 2007
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After successfully controls RHB Bank group’s parent, Rashid Hussain Bhd (KLSE : RHB, stock-code 1309), Malaysia’s state pension fund Employees Provident Fund (EPF) said it would stays as a long-term investor and would appoint professional managers to run the bank. EPF which owns about 30.9% of RHB will be buying another 32.6% from Utama Banking Group (KLSE: UBG, stock-code 6831) and is set to make GO (general offers) to RHB and RHB Capital Berhad (KLSE: RHBCAP, stock-code 1066).

UBG, whose owners have political connections to the ruling coalition, announced today, Mar-8-2007, that it had accepted a revised EPF offer of RM2.25 billion or 1.80 ringgit a share compared with the earlier RM2.2 billion for its 32.6% stake in RHB. EPF’s offer for RHB Capital is 4.80 ringgit per share.

The other two bidders are Kuwait Finance House (KFH) and EON Capital Berhad (KLSE: EONCAP, stock-code 5266). EON Capital’s latest offer was higher at 1.97 ringgit a share for RHB and 5.00 ringgit a share for RHB Capital. RHB stock price was last traded at 1.90 ringgit while RHB Capital stock price was at 4.76 before the trade suspension.

Though the pension fund didn’t specify which of the two bidders will ultimately manage RHB, a statement from KFH in congratulating EPF’s latest victory might indicates that the pension fund entered the battle-ring to help wrestle the crown for KFH.

Overall, the pension fund’s offers value RHB group at 12.73 billion ringgit ($3.63 billion), while EON Capital’s bids put it at 13.38 billion ringgit. Kuwait Finance House has not made a bid for the whole group but says it could invest up to $4 billion to turn its plans for RHB into reality.

Does this means the minority shareholders are not protected when UBG accepted the offers from EPF despite a higher offer from EON Capital? You bet, but due to the large block of stake EPF owns and the political link amongst the main players (EPF, UBG, Minister of Finance and central bank) in this game, you can’t do much, can you? EPF already mentioned that the bid was to protect and maximize return on its investment in RHB group. Read again, it’s not to protect minority shareholders but itself and only itself. By buying at the lowest price possible to control RHB, it has the option to sell to KFH at a higher price or let KFH pumps, runs and grows RHB to maximize profit at a later stage.

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I wonder how former Southern Bank shareholders (especially those major shareholders) feel while looking at the bidding war for RHB Bank.

today rhb drop to 1.74 from 1.90…uuuhhh…any hope?

k.c, southern bank’s major shareholders were being forced to sign on the paper (with gun pointed at their head) without the luxury of even to negotiate with another party for higher price since the head of cimb is a brother of someone with such a power in malaysia … and right after the deal was concluded, the rules were relaxed so that other banking groups can talk to more than one party of m&a …

z, after a game is over, interest on the stock will just disappears …


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