PETALING JAYA: The merger talks between RHB Capital Bhd (RHB- Cap) and the OSK group seem to be bearing fruit.
Both parties will soon submit to Bank Negara Malaysia (BNM) a detailed proposal on the merger between RHBCap and the investment banking unit of the OSK group, according to sources.
“The parties have been in negotiations and seem to have come to more definite terms on the proposed merger. They are nearing completion of discussions and aim to submit the details of the merger as early as this month,” said a source familiar with the matter.
“The due diligence undertaken by RHBCap for the proposed takeover of OSK Investment Bank is on track and the whole deal is targeted to be finalised by March of next year, if everything goes well,” noted another source.
It is understood that both parties are working on the management structure of the potential merged entity.
RHBCap is believed to be looking at bringing in an “outsider” who is not from either entity to lead the investment banking business of the merged entity.
“The RHB group has also been looking for someone to head its investment banking business after the former head Chay [Wai Leong] left earlier this year,” said a source, adding that the bank has a candidate in mind and may hire the person by the first quarter of next year.
There was earlier speculation that OSK’s founder and major shareholder Ong Leong Huat would lead the new merged investment bank. However, it is learnt that the seasoned investment banker will sit on the board rather than hold an executive position Ong will provide input and strategy on a macro level.
To recap, at end-September, RHBCap announced that it written to BNM for approval to commence negotiations with OSK Investment Bank on a possible merger of businesses.
The central bank gave its approval on Oct 13 and the parties have three months from then to negotiate.
The pricing of the deal is not known. Nonetheless, The Edge weekly reported on Oct 3 that RHBCap is likely to pay between 1.9 times and 2.2 times book value of OSK Investment Bank and it would likely involve a share swap.
While the investing public waits for further details of the proposed merger, the share prices of RHBCap and OSK Holdings have been on an uptrend recently.
RHBCap rose 1.2% yesterday to RM6.94 while OSK Holdings was up 2.31% at RM1.77.
Trading volume of RHBCap went up 76% to 2.3 million shares traded from Tuesday but it is still below the 52-week average daily volume of 2.9 million. OSK’s volume shot up 715% to 10.6 million shares traded from Tuesday, 278% higher than the 52-week average daily trading volume of 2.8 million shares.
The recent pick-up in RHBCap’s stock price reverses a downtrend since June after it hit a 14-year high of RM9.89. The banking counter reversed its upward trend after both Malayan Banking Bhd and CIMB Group Holdings Bhd dropped their plans to acquire RHBCap.
Banking analysts believe that the recent increase in the stock’s price could reflect investor anticipation of further information on the proposed merger as well as to factor in the price of the deal.
“There could be some adjustments in pricing so the deal will not be dilutive for the shareholders of both parties,” said a local banking analyst.
This article appeared in The Edge Financial Daily, December 15, 2011.
Both parties will soon submit to Bank Negara Malaysia (BNM) a detailed proposal on the merger between RHBCap and the investment banking unit of the OSK group, according to sources.
“The parties have been in negotiations and seem to have come to more definite terms on the proposed merger. They are nearing completion of discussions and aim to submit the details of the merger as early as this month,” said a source familiar with the matter.
“The due diligence undertaken by RHBCap for the proposed takeover of OSK Investment Bank is on track and the whole deal is targeted to be finalised by March of next year, if everything goes well,” noted another source.
It is understood that both parties are working on the management structure of the potential merged entity.
RHBCap is believed to be looking at bringing in an “outsider” who is not from either entity to lead the investment banking business of the merged entity.
“The RHB group has also been looking for someone to head its investment banking business after the former head Chay [Wai Leong] left earlier this year,” said a source, adding that the bank has a candidate in mind and may hire the person by the first quarter of next year.
There was earlier speculation that OSK’s founder and major shareholder Ong Leong Huat would lead the new merged investment bank. However, it is learnt that the seasoned investment banker will sit on the board rather than hold an executive position Ong will provide input and strategy on a macro level.
To recap, at end-September, RHBCap announced that it written to BNM for approval to commence negotiations with OSK Investment Bank on a possible merger of businesses.
The central bank gave its approval on Oct 13 and the parties have three months from then to negotiate.
The pricing of the deal is not known. Nonetheless, The Edge weekly reported on Oct 3 that RHBCap is likely to pay between 1.9 times and 2.2 times book value of OSK Investment Bank and it would likely involve a share swap.
While the investing public waits for further details of the proposed merger, the share prices of RHBCap and OSK Holdings have been on an uptrend recently.
RHBCap rose 1.2% yesterday to RM6.94 while OSK Holdings was up 2.31% at RM1.77.
Trading volume of RHBCap went up 76% to 2.3 million shares traded from Tuesday but it is still below the 52-week average daily volume of 2.9 million. OSK’s volume shot up 715% to 10.6 million shares traded from Tuesday, 278% higher than the 52-week average daily trading volume of 2.8 million shares.
The recent pick-up in RHBCap’s stock price reverses a downtrend since June after it hit a 14-year high of RM9.89. The banking counter reversed its upward trend after both Malayan Banking Bhd and CIMB Group Holdings Bhd dropped their plans to acquire RHBCap.
Banking analysts believe that the recent increase in the stock’s price could reflect investor anticipation of further information on the proposed merger as well as to factor in the price of the deal.
“There could be some adjustments in pricing so the deal will not be dilutive for the shareholders of both parties,” said a local banking analyst.
This article appeared in The Edge Financial Daily, December 15, 2011.
