Hong Leong completes EON Bank merger
Filed Under (Business News) by Webmaster on 09-05-2011
Tagged Under : eon bank, Hong Leong Bank
Hong Leong Bank Bhd has completed its RM5.06 billion purchase of smaller rival EON Capital Bhd (EONCap), making the enlarged entity the country’s fourth largest banking group.
The move marks the end of a 15-month closely-watched takeover battle, the longest ever in the Malaysian banking sector.
“After 15 months of hard work and delays, the union of these two banks has finally become a reality,” a jubilant Hong Leong group managing director, Yvonne Chia, said at a hastily-called press conference last night to announce the completion of the deal.
Also present at the 8pm conference in Wisma Hong Leong was EON Bank Bhd’s head of group business and investment banking, Peter Chow, and the management team of both banking groups.
Chia assured that it would be business-as-usual at both banks while the integration process takes place. An integration committee will be formed immediately, she said.
The merged group will have an asset size of over RM140 billion and a distribution network of over 300 branches and 1,200 self-service terminals.
Chia said the group will be looking to grow further in the region.
“The theme for us is growth. (The merger) gives me more confidence to do mergers and acquisitions (M&A),” she said, adding that the group would remain open-eyed for M&A opportunities in the region.
On whether there would be layoffs now that the staff strength has been boosted to close to 12,000, Chia said there would be ample employment opportunities for both sides, given the current shortage in banking talent.
Asked if EONCap shareholder Primus (Malaysia) Sdn Bhd’s court appeal against the takeover could upset the transaction, she stressed that the deal had already been legally completed.
“We’ve paid out (the funds) and the transaction is completed,” she remarked.
Primus is a unit of Hong Kong-based private equity firm Primus Pacific Partners (PPP), which had been against the takeover as it stands to make a loss from Hong Leong’s RM7.30-a-share offer for the smaller bank’s assets and liabilities.
PPP had bought its 20.2 per cent stake in EONCap at a much higher price of RM9.55 a share in 2008. Primus’ appeal has been fixed for case management on May 31.
Meanwhile, EONCap said in a stock exchange filing that it intends to distribute the sale proceeds as well as a RM311.9 million dividend payout from EON Bank back to shareholders. Until the money is paid out, it will be kept with financial institutions to earn interest income. EONCap is to be delisted from the stock exchange in due course.
EONCap’s share price gained 5 sen to RM7.40 yesterday, while Hong Leong’s rose 4 sen to RM10.44.
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