Malaysia Eon Capital accepts $1.7 billion takeover

Malaysia Eon Capital accepts $1.7 billion takeover

KUALA LUMPUR, Malaysia -- Malaysian lender Eon Capital on Friday accepted a 5.1 billion ringgit ($1.7 billion) takeover bid by larger rival Hong Leong Bank, paving the way to create the country's fourth largest bank.

The move came after a court Thursday rejected a bid by Eon's top shareholder, Hong Kong-based investment firm Primus Pacific Partners Ltd., to halt the deal because it said Hong Leong's offer was too low and was not in the company's interest.

In a statement Friday to the stock exchange, the Eon board said that following the court verdict it has officially accepted Hong Leong's offer made in April last year.

As part of the deal, it said Hong Leong has agreed to allow Eon to pay a 312 million ringgit ($105 million) dividend to shareholders which would not be deducted from the offer price.

Malaysian banks are consolidating to prepare for foreign competition as the country gradually liberalizes its financial sector. Analysts said the deal between Eon and Hong Leong would create the fourth largest bank in terms of assets.

Hong Leong, sixth-largest lender owned by billionaire Quek Leng Chan, wants to join forces with seventh ranked lender Eon to boost its financial muscle as a regional player and avoid being a target of takeover by bigger banks. The country's top two lenders, Maybank and CIMB Group, are already aggressively expanding in the region.

Primus officials couldn't be reached for comments but its lawyers have told reporters the company would appeal the court ruling. It is unclear how this will affect the Eon-Hong Leong deal.

Hong Leong's offer of 7.30 ringgit ($2.5) for each EON share is below the 9.55 ringgit ($3.2) that Primus paid per share for its 20 percent stake in 2008.

source: forbes.com