Saturday, April 17, 2010

One suitor at a time for EONCap

The central bank has not given any approval other than to Hong Leong Bank to talk to the EONCap board of directors, sources say


An approval from Bank Negara Malaysia for Affin Holdings Bhd to take over EON Capital Bhd (EONCap) (5266) is not possible for now as Hong Leong Bank Bhd has been given exclusive rights to talk to the EONCap board of directors, sources said.

They said the EONCap board had signed a letter giving exclusive rights to Hong Leong to discuss the takeover.

"Under such circumstances, how can the Affin group make an offer or Bank Negara give its consent? The central bank has not given any approval other than to Hong Leong for that matter," one source said.

"If they are interested, the Affin group must wait until the EONCap board and its shareholders have deliberated on the offer made by Hong Leong," the source added.

The source was commenting on a report yesterday that Affin - controlled by Lembaga Angkatan Tentera and its foreign partner Hong Kong's Bank of East Asia Ltd - had submitted a new proposal for EONCap to Bank Negara.

The proposal was said to be the third one coming from Affin for EONCap's assets and liabilities.

Affin's latest offer was said to be higher than Hong Leong's own revised offer for EONCap, and it included a share equity element.

Affin, however, issued a statement yesterday denying that it had submitted a proposal to Bank Negara.

Hong Leong Bank recently revised upwards its offer to buy EONCap for RM5.06 billion cash, or RM7.30 per share.

Hong Leong's previous proposal submitted about three months ago was shot down by EONCap's board, which said the offer price of RM4.92 billion, or RM7.10 per share, significantly undervalued the group.

Meanwhile, an industry official said even if Affin were making the latest hybrid offer by sweetening cash with equity for EONCap, the bid is still not as attractive as that of Hong Leong's.

"A smaller bank marrying another smaller rival will not better a smaller bank marrying a bigger, richer bank," he said.

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