KUCHING: EON Capital Bhd (EON Capital) is expected to table the Hong Leong Bank Bhd’s (Hong Leong) offer to its shareholders’ extraordinary general meeting for their decision before submitting the offer to authorities for approval.Maybank Investment Bank Bhd (Maybank Investment) said in its research report that EON Capital’s board of directors was of the opinion that Hong Leong Bank’s offer of RM7.30 per EON Capital’s share was credible and should be presented to shareholders for their decision.
Another report of AmResearch Sdn Bhd (AmResearch) added that the new offer was 2.8 per cent higher than the previous offer of RM7.10 per share that was rejected by EON Capital.
According to this research house, the pricing for EON Capital was now 1.42 times instead of 1.38 times based on the company’s latest book value of RM5.13 as at the end of December this year.
If agreeable, EON Capital would dispatch the notice of general meeting and shareholders’ circular by April 30, 2010. Thereafter, EON Capital would hold the shareholders’ general meeting no later than 14 days from date of dispatch.
Based on the approval rates for EON Capital’s new directors of an estimated 56 per cent if including shareholders who abstained from voting at its extraordinary general meeting held on March 15, 2010, there was likelihood that more than 51 per cent of shareholders might approve the offer.
On the other hand, Maybank Investment reported that Hong Leong Bank’s board would deliberate on EON Capital’s request though the deal completion was not conditional on this request.
However, the research house was of the opinion that that the RM5.06 billion offer price, although raised from the original RM4.92 billion was still low at 1.42 time book value considering that the acquisition was for the business in its entirety.
A share alternative was more palatable, to enable EON Capital’s shareholders to ride on the upside potential of the enlarged Hong Leong Bank.
It was expected that there would be a dilution of the Hong Leong Bank’s share-holding where Quek Leng Chan’s 64.4 per cent in Hong Leong would dilute to 54.4 per cent though he would remain in control of Hong Leong Bank.
Moreover, Primus Pacific Partners who holds 20.2 per cent of EON Capital would end up holding 6.2 per cent of the enlarged Hong Leong Bank.
Maybank Investment maintained an unchanged target price of RM7.20 for EON Capital.