Hong Leong Bank Bhd has offered RM7.10 per share in a RM4.9 billion all cash deal to take over smaller rival EON Capital Bhd.
The offer will pave the way for a merger that will create the country’s fourth largest bank by assets, overtaking RHB Capital Bhd.
EONCap, owner of the seventh biggest among nine local lenders, said it has received Hong Leong’s proposal yesterday to buy its entire assets and liabilities.
“The board of directors will review the proposal and will make further announcements as and when it has comprehensively reviewed the (terms) and made a decision,” EONCap said in a stock exchange announcement yesterday.
The smaller lender must respond within seven working days starting yesterday, after which the offer will lapse, according to a separate filing by Hong Leong. Once it agrees to the offer, EONCap must deal exclusively with Hong Leong on the sale.
“This is a strong, multi-billion investment into Malaysia’s domestic growth story,” Hong Leong Financial Group Bhd president Raymond Choong said in a press release.
“The merger is a combination of two strong Malaysian banks that will offer the economy, banking sector, customers, employees and shareholders of both banks a highly compelling proposition.”
Hong Leong, currently the number six Malaysian bank, has set conditions in its buyout proposal that restricts EONCap from paying extraor-dinary dividends before the transaction is completed, or to have any adverse change in its financial position.
Hong Leong said the offer price represents a 31.5 per cent premium to EONCap’s average share price in the six months before the takeover news first surfaced on December 17.
EONCap shares closed 3 sen lower at RM7.10 yesterday.
EONCap must confirm within the seven-day offer period that it would present the offer to shareholders in a general meeting and that it will issue the notice to shareholders within five weeks.
EONCap is also required to finalise and submit for regulators’ approval within four weeks of the offer as part of Hong Leong’s conditions.
The transaction will need the approval of shareholders from both banks, Securities Commission, as well as the Finance Ministry through Bank Negara Malaysia.
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