3-WAY MERGER:

CIMB, RHB CAP &

MBSB
Presented By:
ABD SYAFIQ BIN ABD RAZAK (G1317765)
SYAIFUL ASYRAF BIN AHAMIDI (G1317817)
NUR ATIQAH BINTI YAHAYA (G1318226)

Introduction
Merger:
Two firms join
together to form
one firm

The new firm then will experienced

increase in value and decrease in
competition

Efficiency
Protection from
International
competition

Diversificati
on benefit

Protect from
closing

Greater
investment &
R&D

Industry Analysis

Adopted from: Affin Investment Bank: Sector Update as at 11 th July 2014 (before
merger proposal)

BACKGROUND OF COMPANIES

3-way merger
9th October 2014, Thursday
Kuala Lumpur: CIMB Group Holdings Berhad
(CIMB Group), RHB Capital Berhad (RHB
Capital) and Malaysia Building Society Berhad
(MBSB) announced that an application has been
made to Bank Negara Malaysia to seek
approval for its proposed three-way merger. The
merged entity will be a major ASEAN
financial powerhouse and a mega-Islamic
bank.

Source: http://www.cimbbizchannel.com/index.php?ch=352&pg=1220&ac=2376&bb=attachment_2

CIMB (Commerce International

Merchant Bankers Group )
Second largest
financial services
provider in Malaysia.
Among the leaders in
Asian banking
industry.

HQ in Jalan
Semantan
Damansara
Height
Kuala
Lumpur

Listed on Bursa Malaysia via CIMB

Group Holdings Berhad (CIMB 1023)

Services covering
corporate and
investment
banking, consumer
banking, treasury,
insurance and asset
management

Business includes
Malaysia,
Indonesia,
Singapore,
Thailand,
Cambodia, Brunei,
Vietnam, Myanmar
and Laos.

RHB (Rashid Hussain Banking Group )

Fourth Malaysia largest fully integrated financial services group in
Malaysia. HQ in Jalan Tun Razak, Kuala Lumpur
Core businesses
Operations
Retail, commercial,
Nine countries
corporate, investment
includes Malaysia,
banking and
Singapore,
international business. Indonesia, Thailand,
Brunei, Cambodia,
Hong Kong, Vietnam
and Laos.

ASPIRATIONS
Top 3 in Malaysia or Top 8 in
ASEAN
Strong market leadership in
Malaysia

Vision
To be a Leading
Multinational
Financial Services
Group

MBSB (Malaysian Building Society Berhad)

A company incorporated under the companies ACT
scheduled institution as defined under the Banking
Institution Act 1989 (BAFIA)

1965 and is a
and Financial

Many services, among of them are Granting loans on the security

of freehold and leasehold properties. Operates property
development and leases real property through subsidiary
Locatio
n

Jalan Dungun,
Kuala Lumpur

Largest
shareholder:
Employee
Provident Fund
(EPF) (64.5%)

Damansara

Height

Granted by Ministry of
Finance on 1 March 1972
and
the
status
has
remained since
Allows bank to do finance
business without banking
license

MBSB is
an
Exempt
Finance
Company

MERGER PROCESS

Terms of Offer
CIMB group dispose of all its assets and
liabilities of RHB Cap via share swap.
Exchange ratio of 1 RHB Cap for 1.38
CIMB Group shares.

Share swap will require an issuance of

6.04 billion new RHB Cap shares and
enlarge the share capital of RHB Cap to
8.61 billion shares.
CIMB Islamic will acquire all the assets
and liabilities of MBSB at RM7.77
billion, or RM2.82 per share.
MBSB shareholders will have a choice
either to accept cash or new shares in
the unlisted CIMB Islamic group.

Chronological Events
9-Jul-14
10-Jul-14
8-Oct-14
9-Oct-14
21-Oct-14
10-Dec-14
14-Jan-15

Stocks trading suspended.

BNM approval to commence negotiation and
exclusivity agreement between CIMB, RHB,
MBSB.
and
RHB & MBSB agree to the proposed merger
by CIMB.
Mega bank merger terms concluded to see
share swap between CIMB-RHBCap, formation
mega Islamic bank.
of
CIMB, RHBCap, & MBSB share trade
suspended pending announcement.
Bursa says no to EPFs appeal to vote in bank
merger.
Merger deal is off.

ISSUES & RESULTS

Issues
Conflict of interest
EPF owns about 14.5% of CIMB, 41% of RHB Capital and 65% of MBSB
Capable enough to influence the proposed merger for its own benefit
Barred from voting
Employees concern
Several branches which located in the same area will closed
Reduction of human capital
For the RHB, it was initially looking at closing down 150 branches and
cutting down 4,000 to 5,000 employees.
Negative effect to CIMB
RHB will issue one share for every 1.38 CIMB shares
Based on a benchmark price of RM7.27 per CIMB share and RM10.03
per RHB share
The share swap is not to the advantage of CIMB shareholders
For the RHB, CIMB dropped 26 % since the merger was first
announced in Oct. 9, steeper than the 11% drop in RHB's shares,
making the deal unattractive to RHB shareholders
CIMB is the biggest loser

Aabar Investments
RHBs second-largest shareholder.
It will not agree to any deal below RM12 per share for RHB
In June 201, the investment cost to buy RHB Capital share was
RM10.80 per share.
High merger cost
Cost of RM1.4 billion
Ratio 80:20 of capital expenditure and operating expenditure.

If the merger is successful:

CIMB will own 70%

RHB will own 30%

Result
14 January 2015

Merger

Failed

CIMB Bank

RHB Bank

MBSB

THANK YOU