Maybank, CIMB drop RHB pursuit following Aabar Investments' 25% stake acquisition
The potential merger between RHB Capital and either Maybank or CIMB has collapsed after Abu Dhabi-backed Aabar Investments agreed to pay a price for a 25% stake in the Malaysian lender that the banks could not match.
Wahid Omar, CEO of Maybank, said on Friday that his bank, Malaysia's largest financial institution, ended negotiations with RHB Capital because Aabar's MYR10.80-per-share offer was too expensive, the Wall Street Journal Reported. CIMB, Malaysia's second-largest bank, has also pulled the plug on acquisition talks.
Maybank and CIMB's courtship of RHB coincided with Abu Dhabi Commercial Bank's (ADCB) announcement that it would divest its 25% stake in the bank, which was worth an estimated $1.6 billion. Carlyle and TPG were touted as likely bidders alongside Japan's Sumitomo Mitsui Banking Corporation. But Aabar has swept aside the competition with its offer, which represents a 9.7% premium on the most recent closing price. ADCB reportedly paid MYR7.20 per share for the stake in May 2008.
RHB Capital CEO Kellee Kam responded to news of Maybank and CIMB's withdrawls by saying that the bank would consider other merger discussions in the future if valuations and other value-add prospects were in the organization's best interests. RHB, whose worth was estimated at MYR20 billion ($6.65 billion), is Malaysia's fifth-largest banking institution. If it was combined with Maybank or CIMB, the resulting entity might supplant Singapore's DBS as the region's largest lender.
According to the Malaysian Star, shares in RHB dropped 6% on Thursday upon the announcement that Maybank and CIMB were no longer in the running for RHB, and continued to drop 3% to RM8.75 on Friday.
"Our investment in RHB has consistently added value to the shareholders of ADCB via strong dividends and share of profit. At a per share price of RM10.80, this sale is expected to enhance ADCB's H1 2011 profitability upon completion of the transaction. More importantly, the sale will result in the release of capital," ADCB CEO Ala'a Eraiqat said in a statement. "Whilst we have benefited tremendously from our ownership of RHB, the management and Board of ADCB are now clearly focused on executing our strategy of being a UAE centric bank, in line with our commitment to our shareholders."
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