Hong Leong Bank aims for EONCap
HONG Leong Bank Bhd (HLB) (5819) plans to start talks that may lead to the takeover of EON Capital Bhd (EONCap) and catapult it to become Malaysia's fourth biggest banking group by assets.
HLB, currently the sixth biggest in terms of assets, received Bank Negara Malaysia's approval to start talks with "certain shareholders" of EONCap, which is ranked seventh.
"(The talks are) for a potential acquisition of the assets and liabilities, including equity interests in EONCap," HLB said in a statement to Bursa Malaysia yesterday.
HLB did not say which party it would talk to, but sources told Business Times that it was not Primus Pacific Partners Ltd, the Hong Kong-based investment firm which holds 20.2 per cent of EONCap.
This means that HLB may be talking to Singaporean businessman Rin Kei Mei or Tan Sri Tiong Hiew King.
Rin holds 15.46 per cent, while Tiong has another 17.11 per cent.
"We note that Primus came in at a high price and may require a high price to exit. There are also rumours that its substantial shareholder, Rin, wants to sell his stake," OSK Research Sdn Bhd associate director Chris Eng said.
In February last year, Primus bought a fifth of EONCap from DRB-HICOM Bhd for RM1.34 billion, or RM9.55 a share.
Other big shareholders of EONCap are the Employees Provident Fund (11.9 per cent) and Khazanah Nasional Bhd (10 per cent).
EONCap's share price was at a two-year high yesterday, closing at RM6.58, up 18 sen. This gives it a market value of RM4.56 billion.
Shares of HLB rose 4 sen to finish the day at RM8.30. HLB has a market value of RM13.11 billion.
A combination of HLB and EONCap would create a group with total assets of RM121.41 billion. This means that HLB would be able to leapfrog RHB Capital Bhd, currently fourth biggest with assets of RM110.5 billion.
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