Hot Stocks CIMB and MBSB share prices climb on proposed plan for RHB Cap to acquire the duo

by **Cals** Fri 22 Aug 2014, 12:38

Hot Stocks CIMB and MBSB share prices climb on proposed plan for RHB Cap to acquire the duo

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Friday, 22 August 2014 11:19

KUALA LUMPUR (Aug 22): CIMB Group Holdings Bhd and Malaysia Building Society Bhd (MBSB) rose in morning trades on a proposal that the two would be acquired by RHB Capital Bhd in the mega merger.

CIMB continues to climb after it stage a rebound two weeks ago. At 10.57 am today, the banking stock gained 8 sen or 1.1% to RM7.20. It was among the top gainers with some 2.3 million shares changing hands. It earlier hit a high of RM7.22.

MBSB increased three sen or 1.2% to RM2.46 on some 2.09 million shares done.

But, RHB Cap lost 15 sen or 1.6% to RM9.30. The top fourth loser saw trades of 206,100 shares.

The Edge Financial Daily today quoted sources saying that one of the routes being considered currently for the mega merger is for CIMB to sell its entire banking business to RHB Cap to be paid by an issuance of new RHB Cap shares.

An analyst from a bank-backed research house told theedgemalaysia.com that the market was reacting to this possible merger route to be taken by the three financial groups.

“The market is reacting to the news, but there is still much speculation about how the merger will take place. We have to wait and see for the official announcement,” he said over the telephone.

“As for the negative reaction to RHB Cap, we believe it is due to the inability of investors to cash in on its expensive valuation of 1.5 times price earnings ratio, if this merger route materialises,” he added.

According to the analyst, he opined that the ideal route for the merger to happen is via a special purpose vehicle.

Meanwhile, another analyst said that the merger plan is still ‘preliminary’, deeming this merger route as ‘one of the possibilities’.

Last month, CIMB announced it was exploring a three-way merger with its rivals RHB Cap and MBSB in a move to create the country’s largest banking group by assets.

CIMB said it received approval from Bank Negara Malaysia to begin merger talks with RHB Cap and MBSB.

The proposed scheme reported today is contrary to popular belief that CIMB will be the acquirer in the mega merger and end up the holding company.