(adds comments from company officials at news conference)
KUALA LUMPUR (AFX) - Bumiputra-Commerce Holdings Bhd (BCHB) announced a 6.7 bln rgt takeover of Southern Bank Bhd (SBB) in the country's largest-ever corporate deal.
Under BCHB's revised offer, it will pay 4.30 rgt per each share of SBB and 2.56 rgt per SBB warrant, plus five sen dividend per share.
The acquisition will be done via BCHB's unit CIMB.
The company had previously offered 4.15 rgt a share, which was rejected by Southern Bank board as being inadequate.
SBB shareholders have a choice of taking the payout in cash or in a combination of cash and redeemable convertible unsecured loan stocks (RCULS), BCHB said.
'The full terms of the RCULS however will now be determined at the time of the launch of the voluntary general offer as opposed to the earlier pre-announced offer terms,' it said in a statement to Bursa Malaysia.
'Payment for the SBB warrants will be fully in cash. SBB shareholders will also receive a gross dividend of 5 sen per share which will not be adjusted against the offer price,' it added.
After completing the acquisition, BCHB will inject the entire business of SBB into unit CIMB Group, it said.
Both CIMB Group and SBB will make a joint application soon to Bank Negara Malaysia for approval of the revised offer, BCHB added.
The proposed deal is also subject to approvals from the Securities Commission, the Minister of Finance and shareholders of BCHB and SBB, it said.
'Today, we are at the centre of the largest, most public takeover in Malaysian history with ripples that will be felt in coporate Malaysia,' SBB chief executive director Tan Teong Hean said at a joint press conference with CIMB group chief executive Nazir Razak.
The announcement put an end to some five months of market speculation over negotiations behind closed doors, with the deal variously swinging from a merger to a hostile takeover.
Southern Bank in early February ditched merger talks after wrangling over the share price and later rejected a CIMB effective offer price of 4.15 ringgit per share, saying it undervalued the bank.
'I'm happy that we got closure,' said Tan, who had reportedly been reluctant to hand over the bank, and who described the events as 'very challenging'.
The merger has also attracted interest over hopes it will spark off a new wave of banking consolidation after a lull as Malaysia prepares to open up its financial sector to foreign lenders in 2007.
A sweeping program three years ago merged Malaysia's 54 banks and finance houses into 10 banking groups.
'Developments here will trigger a second wave of consolidation in the financial sector as the industry prepares for a new age of fierce global competition,' said Tan.
Nazir hailed the merger as a landmark deal which he said had the unanimous support from the boards of BCHB and SBB, and substantial Southern Bank shareholders.
'The entire transaction is a landmark merger exercise and value enhancing for all shareholders, customers and employees of BCHB and SBB,' he said.
Nazir said the smaller SBB niche bank would help investment bank CIMB to develop its consumer operations and cement the group's position as the second largest banking group behind Maybank.
Combined credit card operations will have an enlarged market share of 11 pct, small and medium business loans will increase by 28 pct and retails loans by 50.7 pct overall, Nazir said.
BCHB's total assets from the deal will also increase from 121 bln to 152 bln rgt, he said.
'With this acquisition we will be decisively number two across the board,' he said in reference to key rival Maybank.
The voluntary general offer is expected to be completed in late May or early June, he said.
Nazir also said his group has no current plans for more acquisitions but will focus efforts on expanding to neighbouring countries, including Indonesia.
'I think our first priority is export to Indonesia. The group has control of (Indonesian) Bank Niaga, but to date we have not exported consumer banking to Indonesia as such,' he said.
'Our priority markets will be Malaysia, Singapore and Indonesia.'
(1 usd = 3.77 rgt)
hws/afp/rc
© 2006 AFX News
