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KUALA LUMPUR, Oct 11 (Bernama) -- The share prices of Public Bank Bhd and LPI Capital Bhd contracted following the news of the bank’s proposed acquisition of a 44.15 per cent stake in LPI Capital Bhd to provide a more comprehensive service offering.
At 10.36 am, Public Bank’s share price was down by 20 sen to RM4.37, with 61.74 million shares traded, while LPI Capital’s share fell by 40 sen to RM12.6 with 759,000 shares changing hands.
Public Bank has proposed to acquire a stake in LPI Capital, comprising 175.9 million shares, for RM1.72 billion in cash or RM9.80 per share.
Following the proposed acquisition, Public Bank will be required to extend a mandatory general offer (MGO) to acquire all remaining LPI shares not already held by the bank.
Before this announcement, Public Bank and LPI Capital shares were suspended from 9 am on Oct 9, pending a major announcement via separate filings from the two companies to Bursa Malaysia.
Trading for both companies resumed at 9 am today.
Public Bank, the country’s third largest banking group by assets, has a cash reserve of RM12.4 billion.
Meanwhile, LPI Capital, 42.74 per cent owned by Consolidated Teh Holdings Sdn Bhd (a private investment vehicle of Public Bank founder, the late Tan Sri Teh Hong Piow) fully owns the general insurance company Lonpac Insurance Bhd.
In a note today, MIDF Amanah Investment Bank Bhd said it maintained a ‘buy’ call for both Public Bank and LPI capital with an unchanged target price of RM5.16 and RM14.52, respectively.
“We are neutral with a slight positive bias about this proposed acquisition. While the proposed transaction will be value accretive, we opine it will not be significant,” it said.
Nevertheless, MIDF Amanah said the acquisition could unlock some synergy, such as leveraging the customer networks of both parties and bundling products.
Meanwhile, Hong Leong Investment Bank Public said the deal was seen as positive since its valuations were inexpensive while being profit and return of equity accretive.
“As for the restricted offer for sale, we laud the move to reward long-term and loyal stakeholders,” it said.
-- BERNAMA
