KUALA LUMPUR: Shares of RHB CAPITAL BHD [] and CIMB Group Holdings Bhd were mostly unaffected by a news report that RHB Cap was planning to take ovr the country's second largest banking group.
At 3.08pm, RHB Cap was down three sen to RM9.13 with 264,000 shares done while CIMB rose two sen to RM8.95 with 3.31 million units.
The FBM KLCI fell 0.78 of a point to 1,578.29. Turnover was 497.93 million shares valued at RM730.39 million. There were 285 gainers, 347 losers and 321 stocks unchanged.
OSK Research described such a merger of CIMB-RHB would in itself be value destructive given the various lines of revenue duplication.
'And with RHB Capital being significantly smaller than CIMB, acquiring the latter will result in greater value destruction for RHB Capital post merger,' it said.
OSK Research said the Employee Provident Fund (EPF) could well afford to back an all cash deal, which is likely to be the preferred option if Khazanah Nasional is indeed interested in an all-out exit.
It estimated the post RHB-CIMB merged entity would face a potential earnings per share dilution of 12.5%. More importantly, the ROE of RHB Capital will deteriorate from 15% to 8%.
'Assuming a fair acquisition all cash offer pricing of RM9.60/CIMB share (3.02 times 1QFY11 PBV), we estimate that RHB Capital would have to raise close to RM58 billion in new equity via a rights issue priced at a 25% discount to the current market price in order to maintain the enlarged group's core equity ratio at a reasonable 8.2%.
'This is essentially equivalent to raising its new share base by nearly 5.0 times to counter the RM47.7 billion in goodwill potentially arising from the acquisition,' it said.
''
At 3.08pm, RHB Cap was down three sen to RM9.13 with 264,000 shares done while CIMB rose two sen to RM8.95 with 3.31 million units.
The FBM KLCI fell 0.78 of a point to 1,578.29. Turnover was 497.93 million shares valued at RM730.39 million. There were 285 gainers, 347 losers and 321 stocks unchanged.
OSK Research described such a merger of CIMB-RHB would in itself be value destructive given the various lines of revenue duplication.
'And with RHB Capital being significantly smaller than CIMB, acquiring the latter will result in greater value destruction for RHB Capital post merger,' it said.
OSK Research said the Employee Provident Fund (EPF) could well afford to back an all cash deal, which is likely to be the preferred option if Khazanah Nasional is indeed interested in an all-out exit.
It estimated the post RHB-CIMB merged entity would face a potential earnings per share dilution of 12.5%. More importantly, the ROE of RHB Capital will deteriorate from 15% to 8%.
'Assuming a fair acquisition all cash offer pricing of RM9.60/CIMB share (3.02 times 1QFY11 PBV), we estimate that RHB Capital would have to raise close to RM58 billion in new equity via a rights issue priced at a 25% discount to the current market price in order to maintain the enlarged group's core equity ratio at a reasonable 8.2%.
'This is essentially equivalent to raising its new share base by nearly 5.0 times to counter the RM47.7 billion in goodwill potentially arising from the acquisition,' it said.
''
No comments:
Post a Comment