Maybank to purchase Kim Eng Securities
SINGAPORE : Malaysia's leading banking group Maybank is poised to emerge as one of top five brokerages in Southeast Asia after making a move to acquire Singapore broker Kim Eng Holdings.
It is launching a general offer for Kim Eng, offering $3.10 per share for the shares of the brokerage after buying over a substantial stake from key shareholders.
The acquisition also marks Maybank's foray into the Thai market.
In making the announcement at Maybank headquarters on Thursday, CEO of Maybank Group, Abdul Wahid Omar, said he plans to take Kim Eng private after completing the takeover.
He added : "We expect..exciting times ahead, Kim Eng will extend investment banking scope and reach very much in line with regional aspiration. They are complementary business and geographic footprint."
The acquisition will complete Maybank's footprint in Southeast Asia.
While the Malaysian lender has a commercial-banking presence in the region, up to now its stock broking and investment banking business has been limited to the home market.
Tying up with Kim Eng will give it stockbroking operations across the region in markets like Singapore, Thailand and the Philippines.
Under the deal, Maybank is acquiring a 44.6 per cent stake in Kim Eng Holdings at S$3.10 a share - it is buying a 15.44 per cent stake from Mr Ronald Anthony Ooi and a further 29.19 per cent stake from Yuanta Securities Asia Financial Services.
The two transactions are worth a combined S$798.5 million.
It has made an offer for all remaining shares at the same price, resulting in a total consideration of almost S$1.8 billion, or about US$1.4 billion, for the acquisition.
That works out to a multiple of 1.91 times of Kim Eng's book value and a price to earnings ratio of 20 times.
And the purchase price represents a premium of 15 percent to the counter's last closing price of S$2.70.
Maybank has described the valuation as fair.
It noted that Kim Eng's significant presence in Southeast Asia, as well as Hong Kong, New York and London would provide many cross-selling opportunities and enhance Maybank's distribution capabilities.
The acquisition is also in line with the bank's vision to be a regional financial leader by 2015.
Apart from tapping into Kim Eng's 200.000 client base, the current management team led by Chairman and CEO Ronald Ooi will remain for a minimum period of three years to oversee the integration which is expected to be completed by April this year.
Kim Eng is expected to boost Maybank's income from investment banking from the current 2 per cent to 8 per cent in the next financial year and further boost its overseas earnings from the current 29 percent to 34 per cent by 2012.
Japan's Nomura Holdings and Maybank's investment banking arm are advising Maybank on the sale.
My Comments: Congratulations to all those who have Kim Eng shares, especially those who bought Kim Eng below 2 dollars and those Kim Eng shareholders who had collected good
dividends from Kim Eng over these years. :)
On another note, congrats to shareholders of other brokerage firms like UOB Kay-Hian and G.K.Goh, who have reaped a paper gain of over 10% today.