BIMB shares rise on acquisition

BIMB shares rise on acquisition
Business & Markets 2013
Written by bernama
Friday, 02 August 2013 11:10

KUALA LUMPUR, (Aug 2): BIMB HOLDINGS BHD []'s share price rose this morning after the proposed acquisition of 49 per cent in Bank Islam Malaysia Bhd from other two major shareholders for US$884.6 million (RM2.8 billion).
The company has a conditional sale and purchase agreement for the proposed acquisition of Dubai Financial Group LLC and Lembaga Tabung Haji's block shares in Bank Islam Malaysia Bhd.
Dubai Financial Group and Lembaga Tabung Haji each hold 30.47 per cent and 18.53 per cent, respectively, in Bank Islam, while BIMB owns the remaining 51 per cent.
As of 10.44 am, BIMB Holdings' share price was up 12 sen, or 2.93 per cent to RM4.24, with 462,500 shares changing hands.
To fund the acquisition, BIMB Holdings has proposed a right issue on the basis of two rights shares with two free warrants for every five existing shares held, raising RM1.536 billion and a 10-year sukuk (Islamic bond) to raise RM1.471 billion.
Lembaga Tabung Haji has an undertaking to subscribe for any remaining unsubscribed rights and warrants.
HwangDBS Vickers Research has raised the target price to RM4.30 to account for the acquisition and rights/warrants impact.
The research house forecasts earnings for BIMB in financial year 2014 to be enhanced by 60 per cent in post-acquisition.
"The deal is return of equity accretive by 2.4 percentage point due to larger earnings enhancement versus book value," HwangDBS said in a note today.
However, tighter measures on consumer loans could cap growth.
Personal financing comprised 33 per cent of Bank Islam's loan book and Bank Negara's tighter measures could soften the robust growth in this segment, it added.