online casino bluebook - online casino gambling guide, to top ranked online casinos and reviews of over 200 gambling related websites. www.onlinecasinobluebook.com also host a casino forum, blog, and casino news articles
Saturday January 23, 2010 EON Cap board yet to decide on calling for vote
By ELAINE ANG
PETALING JAYA: The EON Capital Bhd (EON Cap) board has not yet made a decision on whether to put before shareholders the proposed purchase of its assets and liabilities by Hong Leong Bank Bhd (HLB) for RM4.92bil cash, sources said.
They added that the board was not obliged to put the proposal to shareholders if it felt that the offer was too low. However, it was possible for other shareholders to requisition an EGM to put the matter before shareholders.
In its offer for the assets and liabilities of EON Cap Thursday, HLB had given the EON Bank board seven days to confirm the tabling of the offer for consideration and approval by the shareholders.
It said if it did not receive any confirmation within the seven days, the offer would lapse.
Other sources said Primus Pacific Partners (HK) Ltd, which holds a fifth of EON Cap, is understandably not interested in the all-cash offer which would crystallise its losses.
Primus had bought the shares at RM9.55 a share in early 2008 which is more than a third above HLB’s offer price of RM7.10 a share.
Meanwhile, analysts are divided over whether the offer, which works to RM7.10 per EON Cap share, is fair and whether the proposed acquisition would go through.
OSK Research believes the four non-strategic shareholders of EON Cap – Tan Sri Tiong Hiew King, Rin Kei Mei, Khazanah Nasional Bhd and the Employees Provident Fund – would eventually agree to HLB’s offer.
This was because there was no guarantee that more attractive counter-bids would materialise despite the recent announcement by EON Cap seeking Bank Negara approval to start negotiations with multiple parties, it said.
The four shareholders collectively hold 53.6% equity in EON Cap, which is more than sufficient for HLB to see the deal through via the assets and liabilities method, which only requires the approval of 50% of EON Cap’s shareholders plus one share.
“In addition, the offer from HLB may lapse if the central bank delays in its approval for EON Cap to start negotiating with other third parties,” OSK said.
OSK noted that although the offer price of RM7.10 per share was slightly lower than its anticipated 1.51 times price to book value (PBV), or RM7.60 per share, it was fair given EON Cap’s sub-par industry return on equity (ROE), loans growth and asset quality.
The offer price essentially values EON Cap at 1.41 times PBV based on EON Cap’s book value of RM5.03 per share as at end-September 2009, which analysts say is the lower end of the recently transacted medium-sized domestic banking merger and acquisition (M&A) valuation range of 1.3 times to 1.8 times PBV.
MIDF Research believes that it is highly likely for the deal to go through if there are no other bidders based on the cost of the major shareholders, with the exception of Primus which was at a hefty RM9.55 per share.
Although HLB’s offer is lower than general expectations, it is believed that the price is still higher than the Rin and Tiong groups’ cost of around RM2 per share, and Khazanah and EPF’s cost of below RM6 per share.
“What remains to be seen is whether there will be competing bids within the seven-day period during which the EON Cap board is required to give a confirmation to HLB,” MIDF said.
AmResearch does not expect a competing bidder for EON Cap to emerge in the short term.
“We believe EON Cap’s shareholders will be better off taking the current all-cash offer from HLB and considering alternative investments elsewhere,” it said.
AmResearch, which pegged EON Cap’s fair franchise value at RM5.50 per share without a takeover scenario based on PBV of 1.0 times and derived from estimated ROE of 9.7% for financial year ending Dec 31, 2010 (FY10), strongly believes the offer from HLB is fair and reasonable.
“Based on our estimates, to take our fair franchise value for EON Cap to RM7.10, EON Cap’s ROE would need to be uplifted to 11% at least, a scenario that is expected to be realised only beyond FY11 – a few years down the road,” it said.
TA Securities, however, expects to see some resistance coming from some of EON Cap’s major shareholders (in particular Primus) due to the sharp discount in PBV valuation.
RHB Research concurred.
“Acceptance from EON Cap is not guaranteed as Primus is likely to object to the deal, given the cheap pricing.
“Even if shareholders decided to call for an EGM, Khazanah and EPF’s decisions will be critical to achieve the required 50% plus one share approval,” it said.
RHB added that other suitors might make a better offer within the next seven days.
Saturday January 23, 2010 Tyranny of the majority
A QUESTION OF BUSINESS
By P. GUNASEGARAM
Hong Leong Bank’s bid for EON Capital is yet another example of how the Takeover Code is being made a mockery of at the expense of minorities.
CONTRARY to popular belief, Hong Leong Bank, is NOT making an offer for EON Capital shares at RM7.10 a share. What it is doing is paying RM4.92bil for the assets and liabilities of EON Capital, which works out to RM7.10 a share.
The difference is very important and it makes it very much easier for a predator to take over a company, effectively forcing all minority shareholders out of their stake.
This is the tyranny of the majority. It may interest readers to know that two of Malaysia’s largest takeovers took this route of buying over assets and liabilities, which under the Companies Act, requires only a simple majority of shareholders to approve at an extraordinary general meeting.
They were Malaysia Mining Corp’s takeover of power generator Malakoff’s assets for RM9.3bil and Bumiputra-Commerce Holdings’ purchase of Southern Bank’s assets and liabilities for RM6.7bil, both in 2006.
Now, Hong Leong Bank is going the same route by proposing to acquire EON Capital’s assets and liabilities for RM4.92bil to leave an empty shell behind, effectively paying RM7.10 per EON Capital share.
That effectively bypasses and makes a complete and utter mockery of the Malaysian Code on Takeovers and Mergers.
If Hong Leong Bank were to go the Takeover Code route, than it can only acquire all of EON Capital if gets acceptance for at least 90% of shares which it does not own.
Only then can it compulsorily acquire the remaining shares it does not own. Assuming that it currently owns none of EON Capital shares, it must get at least 90% acceptance and raise its stake to 90% before it can compulsorily acquire the remaining shares.
And if over 25% of EON Capital shares are still in the hands of minority shareholders, then the company can continue to be listed and traded on Bursa Malaysia, even if control should switch over to Hong Leong Bank.
The clear intention of the Takeover Code is that minority shareholders should not be forced out of the business by the majority and should have the option to hold on to a business if they felt that the price offered was not good enough for them to accept.
But the Company’s Act offers a loophole which is yet to be closed.
In this case, two major shareholders, Rin Kei Mei and Tan Sri Tiong Hiew King hold a combined stake of 31.7%. Khazanah Nasional has 10% and the Employees Provident Fund 11.9%. These four shareholders have a combined 53.6%. If they approve, the deal goes through.
While we are not saying that it is actually the case in this instance, who is to know whether there are special arrangements between the predator and major shareholders or not?
It is well known that Rin and Tiong don’t get along too well with Primus Pacific Partners (HK) Ltd, which has a 20.25% stake in EON Capital which it bought at an astronomical RM9.55 per share in early 2008.
Despite just the one-fifth stake, Primus has been driving EON Capital management since.
If Primus sees RM9.55 per share as value in 2008, more than a third above Hong Leong Bank’s RM7.10 per share equivalent, it is fair to ask if the underlying value of EON Capital is still anywhere near that figure.
However, not just Primus but all other minority shareholders will effectively have their interests in EON Capital taken away from them at RM7.10 a share if the four major shareholders decide so.
That’s the unfairness of using the Companies Act and structuring the deal to acquire all the assets and liabilities of EON Capital instead of its shares.
As a developing capital market we should have closed that loophole a long time ago. That’s actually quite easy to do. Some countries have much higher requirements for shareholder approval in the event that a company sells most of its assets. This can amount to 75%, or even 90%, of shareholders to approval.
Considering that compulsory acquisition under the Takeover Code can only be made when acceptances are received for over 90% of outstanding shares, the figure should be 90% of shareholders to approve disposal of substantive assets of a company.
That will stop majority shareholders from abusing their positions by depriving minority shareholders from either receiving a fair price for their stakes or holding on to their stakes and enjoying future returns.
Otherwise, expect further future abuse of the Takeover Code to the detriment of minority shareholders and eventually the very development of a fair and equitable capital market in Malaysia.
Managing editor P. Gunasegaram says any kind of tyranny, including that of the majority, is bad.
EON Cap says Hong Leong Bank offer “significantly undervalues” group
Written by The Edge Financial Daily
Tuesday, 26 January 2010 00:45
KUALA LUMPUR: EON CAPITAL BHD [] says HONG LEONG BANK BHD []'s RM4.92 billion takeover proposal, deems the offer price as "significantly" undervaluing the targeted banking group.
EON Capital chairman Tan Sri Syed Anwar Jamalullail said on Monday, Jan 25, it had "sought clarification" from Hong Leong Bank on a range of details in its acquisition proposal, with a particular focus on valuation.
“The board is evaluating this approach but on the face of it, the offer price significantly undervalues EON Capital... In evaluating the Hong Leong Bank offer, we will consider all alternatives open to us in order to fulfil our responsibility to shareholders,” he said.
Last Thursday, Hong Leong Bank made a RM4.9 billion cash offer to acquire all of EON Capital group's assets and liabilities, which include its core operations in EON Bank Bhd, translating into RM7.10 per share.
The offer translates to 1.4 times book value based on a shareholders’ fund of RM3.49 billion as at Sept 30, 2009.
EON Capital has seven days to confirm that it is agreeable to table the offer for consideration and approval by its shareholders at a general meeting and take steps to issue and despatch within five weeks from the offer date the notice of the general meeting and the shareholders' circular.
EON Capital fell three sen to a one-week low of RM6.99, with 188,800 shares changing hands, while Hong Leong Bank lost nine sen to RM8.33, with 399,300 shares traded.
EON Capital has sought clarification from Hong Leong 'on a range of details' in its buyout proposal, particularly on the valuation.
EON Capital Bhd (EONCap)(5266), which must decide on Hong Leong Bank Bhd's takeover offer by tomorrow, may try to remove the clause that restricts it from talking to other potential bidders while asking for a higher price.
EONCap, the smaller of the two banks, said it has yesterday sought clarification from Hong Leong "on a range of details" in its buyout proposal, particularly on the valuation.
"The board (of directors) is evaluating this approach, but on the face of it the offer price significantly undervalues EONCap," chairman Tan Sri Syed Anwar Jamalullail said in a statement yesterday.
Hong Leong, the sixth largest local bank, last Thursday said it will offer RM7.10 cash per share to take over EONCap. The offer priced EONCap at 1.4 times book value, which falls in the lower end of the past valuations range in local banking deals.
Still, many banking analysts feel that the price offered was fair given EONCap's weaker franchise, though others argued that scarcity premiums should be attached as there are not many local lenders left available for a takeover.
Hong Leong has also set strict conditions in its proposal, one of which requires EONCap to deal with it exclusively on the sale.
"In evaluating the Hong Leong Bank offer, we will consider all alternatives open to us in order to fulfil our responsibility to shareholders," Syed Anwar said yesterday.
Meanwhile, EON Banking Group chief executive officer Michael Lor was quoted by Bernama news agency as saying that EONCap's board was also looking into other offers as there were interested parties.
"If there are better opportunities, why not pursue all the alternatives?" he told reporters in Petaling Jaya yesterday. Lor, however, said that he did not know whether other banks had submitted their applications to Bank Negara Malaysia to participate in the negotiations.
EONCap said it had launched a three-year transformation programme in October 2007, which sharply improved the bank's performance despite difficult economic conditions in 2009.
"In the past year, we have seen our transformation programme succeeding. As Malaysia emerges from the economic downturn, EONCap is well positioned for future value creation," Syed Anwar said.
Tuesday January 26, 2010 EON Cap says HLB offer too low
By YVONNE TAN
Advisers indicate other parties interested in EON Cap
PETALING JAYA: The EON Capital Bhd (EON Cap) board of directors yesterday said the RM4.92bil cash offer from Hong Leong Bank Bhd (HLB) significantly undervalues EON Cap and its financial advisers have indicated that there are other parties interested in acquiring EON Cap.
In a statement last night, the board said it had sought clarification from HLB on a range of details in its acquisition proposal, with particular focus on valuation.
“The board is evaluating this approach but on the face of it, the offer price significantly undervalues EON Cap,” chairman Tan Sri Syed Anwar Jamalullail said in the statement.
The statement said the banking group launched a three-year transformation programme in October 2007 which sharply improved the performance of the bank despite difficult economic conditions in 2009, delivering 8% growth in residential mortgage loans, 15% growth in credit card and personal loans and 14% growth in hire purchase loans in the first three quarters of 2009.
Earnings improved in terms of net income, return on assets and return on equity, it said.
“In evaluating the HLB offer, we will consider all alternatives open to us to fulfil our responsibility to shareholders,” Syed Anwar said.
Meanwhile, EON Bank group chief executive officer Michael Lor said EON Cap’s financial advisers had indicated that apart from HLB, there were other parties interested in acquiring it.
“I am not sure if they (these parties) are seeking Bank Negara’s approval at the moment to start talks with us but our financial advisers have introduced some potential parties to us.
“If there are better opportunities, the board is bound to make sure it pursues all of them,” Lor said after the underwriting ceremony for ECS ICT Bhd.
EON Bank is a subsidiary of EON Cap. Goldman Sachs and Ethos & Co are respectively EON Cap’s international and local financial advisers for its strategic review.
There is speculation RHB Capital and Alliance Financial Group Bhd may be interested parties but sources close to the companies indicate that this is unlikely at this point.
“RHB has expressed that it is not interested in EON Cap. It is more interested in building value from its current structure,” a source said yesterday.
A source at Alliance said he had no knowledge of Alliance submitting a competing bid for EON Cap at this point.
Meanwhile, saying that he “was in no position” to reveal who the parties were nor elaborate further, Lor said the board would “within the next few days” make an announcement as to what it planned to do and what decision would be taken.
In its RM4.92bil cash offer for the assets and liabilities of EON Cap last Thursday, HLB had given the EON Cap board seven days to confirm the tabling of the offer for consideration and approval by the shareholders.
Lor said the board was looking at the “best options and the best alternatives. That’s why they are taking a little bit more time in their deliberations.”
On Jan 6, Bank Negara gave the green light for HLB to start negotiations on the acquisition of EON Cap’s assets and liabilities, including equity interests.
EON Cap had also said it was seeking Bank Negara approval to start negotiations with multiple parties, with regards to this.
Research outfit AmResearch Sdn Bhd does not expect a competing bidder for EON Cap to emerge in the short term.
‘’We believe EON Cap’s shareholders will be better off taking the current all-cash offer from HLB and considering alternative investments elsewhere,’’ the house told its clients last week.
Still, other houses like TA Securities and RHB Research believe that EON Cap’s major shareholders (in particular Primus Pacific Partners (HK) Ltd) may offer some resistance due to pricing issues. Primus, which holds a fifth of EON Cap, is said to be uninterested in the all-cash offer which would crystallise its losses.
Primus had in early 2008 bought the shares at RM9.55 a share, which is more than a third above HLB’s offer price which works out to RM7.10 a share.
Analysts feel the other four non-strategic shareholders of EON Cap – Tan Sri Tiong Hiew King, Rin Kei Mei, Khazanah Nasional Bhd and the Employees Provident Fund – would eventually agree to HLB’s offer.
On the entirely cash deal, an analyst said it was easier than a share-swap deal as “a cash deal would be completely clean; not to mention more cost-effective.”
“Some of the shareholders may want to make a clean exit and a cash deal is seen as the best option,” she said.
Meanwhile, Lor said that from a management perspective, what was more important for the bank was that it continued to drive its business “as aggressively” as possible.
“Within the first two weeks or so of the year, we’ve already been involved in two initial public offerings, I think that’s a good thing,” he said, referring to Homeritz Corp Bhd and ECS.
EON Cap’s subsidiary MIMB Investment Bank is the advisor, sole underwriter and co-placement agent for the ECS IPO.
‘Significantly undervalued’
Written by Financial Daily
Tuesday, 26 January 2010 11:10
KUALA LUMPUR: EON Capital Bhd (EONCap), while evaluating Hong Leong Bank Bhd’s (HLBB) RM4.92 billion takeover proposal, deems the offer price as “significantly” undervaluing the targeted banking group.
EONCap chairman Tan Sri Syed Anwar Jamalullail said it had “sought clarification” from HLBB yesterday on a range of details in its acquisition proposal, with a particular focus on valuation.
“The board is evaluating this approach but on the face of it, the offer price significantly undervalues EON Capital... In evaluating the Hong Leong Bank offer, we will consider all alternatives open to us in order to fulfil our responsibility to shareholders,” he said in a statement yesterday.
EONCap fell three sen to a one-week low of RM6.99 yesterday, with 188,800 shares changing hands, while HLBB lost nine sen to RM8.33, with 399,300 shares traded.
Last Thursday, HLBB made a RM4.9 billion cash offer to acquire all of EONCap group’s assets and liabilities, which include its core operations in EON Bank Bhd, translating into RM7.10 per share.
The offer translates to 1.4 times book value based on a shareholders’ fund of RM3.49 billion as at Sept 30, 2009.
EONCap has seven days to confirm that it is agreeable to table the offer for consideration and approval by its shareholders at a general meeting and take steps to issue and despatch within five weeks from the offer date the notice of the general meeting and the shareholders’ circular.
Within the seven days, EONCap would have to agree to finalise and make submissions to the authorities for the relevant approvals within four weeks and agree to deal exclusively with HLBB.
If HLBB did not receive EONCap’s agreement to those matters within seven days, the offer will lapse. Upon receipt of the agreement, HLBB’s offer will remain open for eight weeks from the offer date.
EON Bank group consists of EON Bank and its two main subsidiaries — EONCAP Islamic Bank and MIMB Investment Bank Bhd.
Meanwhile, Joyce Goh reported that Syed Anwar’s statement followed an EONCap board of directors’ meeting yesterday.
“They (board of directors) are unimpressed with the offer and are faced with a dilemma now given the short time frame.
“They believe that the offer should be about two times to three times price-to-book given the precedent financial institution group (FIG) transactions in Malaysia as well as based on the improvement in the financial results the banking group has seen and the transformation it has done,” said a source familiar with the matter.
“This is a sale with a controlling stake in the bank... And let’s not forget scarcity premium,” added the source.
The previous FIG transactions include Abu Dhabi buying a stake in RHB Capital Bhd for 2.2 times, Bank of Tokyo Mitsibushi buying a stake in Bumiputera-Commerce Holding Bhd at 3.1 times and ANZ buying AMMB Holdings Bhd at 1.8 times.
In his statement, Syed Anwar said the banking group, the country’s seventh largest, had launched a three-year transformation programme in October 2007 and had in the past year seen it “succeeding”.
“As Malaysia emerges from the economic downturn, EON Capital is well positioned for future value creation. I am looking forward to working with our experienced management team to continue to deliver excellent results,” he said.
Syed Anwar said the programme had sharply improved the bank’s performance despite difficult economic conditions last year, delivering 8% growth in residential mortgage loans, 15% growth in credit card and personal loans, and 14% growth in hire-purchase loans in the first three quarters of 2009.
He said earnings improved in terms of net income, return on assets (ROA) and return on equity (ROE), and over the last 12 months, EON Capital’s stock price appreciated by more than 110%.
In Petaling Jaya, Darlene Liew reported EONCap group CEO Micheal Lor as saying the bank had yet to start merger and acquisiton talks with any other party.
“The whole board is working closely on the matter and having meetings regularly. If there are better opportunities that comes along, why not?” he told reporters after an underwriting ceremony between ECS ICT Bhd and MIMB Investment Bank yesterday.
To a question, Lor said it was the board’s responsibility to consider all alternatives available to find the best options for the group.
It has been reported that if the acquisition by HLBB was successful, the merger would propel HLBB to become the country’s fourth-largest banking group with total assets of about RM111 billion. The enlarged entity would have a network of over 320 branches and about 1,200 self-service terminals.
This article appeared in The Edge Financial Daily, January 26, 2010.
