CIMB, RHB Capital and MBSB seek approval from Bank Negara for three-way merger

The merger will see a share swap between CIMB Group and RHB Capital at an exchange ratio of 1.38 (one RHB Capital share for 1.38 CIMB Group share).

This is based on a benchmark price of RM7.27 per CIMB Group share and RM10.03 per RHB Capital share, according to joint statement by CIMB Group, RHB Capital and MBSB.

CIMB Group shareholders will own 70 per cent of the merged CIMB-RHB Group and RHB Capital shareholders the remaining 30 per cent.

In tandem, CIMB Islamic, RHB Islamic and MBSB would merge to form a mega Islamic bank.

This would be done at a price of RM2.82 per MBSB share, and MBSB shareholders would have the option of receiving cash or CIMB Islamic shares as consideration.

It is envisaged that the newly-created mega Islamic bank would remain a subsidiary of the merged CIMB-RHB in partnership with ex-MBSB and/or new strategic shareholders.

According to the statement, the deal is expected to complete in mid-2015.

The parties would now move towards the due diligence process in view of signing a definitive sale and purchase agreements (SPA) in early 2015.

Following the SPA, consent of other regulators and shareholders will be sought.

The merged entity would be a major Asean financial powerhouse and a mega Islamic bank.

Shares of CIMB Group, MBSB and RHB Capital, which were suspended today were last traded at RM6.98, RM2.37 and RM8.70, respectively.

CIMB Group's acting group chief executive, Datuk Tengku Zafrul Tengku Abdul Aziz, said the exercise will cement CIMB Group's position among the top banks in Asean and bring a host of value creation opportunities for its stakeholders.

"We are excited that we can now move forward and work towards seeking the necessary approvals to effect this merger," he said.

RHB Capital group managing director, Kellee Kam, said the merger will enable the bank to become a regional financial powerhouse via the merged entity.

"The task ahead for us now is to ensure that we meet all the expectations of our stakeholders, thereby creating new opportunities for our employees, enhanced services and product offerings for our customers, and increasing returns and value for our shareholders," Kam said.

President/chief executive officer of MBSB, Datuk Ahmad Zaini Othman, said the strategic rationale for the merger and the subsequent creation of a mega Islamic bank is clear and MBSB is focused on getting this to the finish line.