23 June 2011

Why Maybank and CIMB gave up on RHBCap? (23 June 2011)

Merely less than one month of battle (not even pulling off the gun), both Maybank and CIMB today respectively announcing to abort the merger talks with RHBCap. Funny oh? First, the news of aborting was first reported by a Singapore newspaper, not Malaysia, and why not Malaysia? Second, both contenders had set end of June's proposals, announced just only last week. So fast change mind?

Both CIMB and Maybank are turning their heads away from RHB now.
Of course, between the dates, Abu Dhabi Commercial Bank (ADCB) made a significant headline when it sells its 25% stake in RHBCap to its sister company, Aabar Investment, for RM10.80 per share, which value RHBCap at 2.25 times RHBCap book value. Does this really affecting the merger talks?

What CIMB says?

In a statement Thursday, June 23, CIMB group chief executive Datuk Seri Nazir Razak said that based on its discussions and assessment of the present expectations of key stakeholders, the bank did not believe that it would be able to arrive at a value creating merger.

“Merger negotiations are both resource consuming and distracting for staff and stakeholders.

"Therefore, we prefer not to prolong our discussions unnecessarily, allowing all parties to return to ‘business as usual’ as soon as possible,” he said. (TheEdge)

What Maybank says?
“In light of recent developments and following further deliberations, the board of directors of Maybank has decided not to pursue the possible merger at this juncture,” Maybank said on Thursday, June 23. (TheEdge)

Who knows? RHB's investors should sell their holdings above RM10 previously.
What Finance Malaysia says?
"The merger talks most probably is still on-going, but behind the board room. ADCB's RM10.80 did set a hindrance for both parties to proceed with the merger talks, in order to convince other shareholders."

"Other than that, EPF's role is crucial for all parties to consider now. Sooner or later, EPF must divest its stake to below 20%. By then only can EPF remove itself from the day-to-day operations of RHB Bank. Remember, EPF's role was supposed to invest, not managing a company."

"Thirdly, Maybank and CIMB may think that the merger talks would takes a long time to consider, and it may affects the day-to-day operations of RHB Bank. Just like EONCap, many of their staffs are turning to other banks while Hong Leong Bank is launching and fighting its merger plans."

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