KUALA LUMPUR: In yet another twist to the high-profile potential RM4.92 billion takeover of EON Capital Bhd (EONCap) by Hong Leong Bank Bhd (HLBB), the latter said yesterday it has rejected a request by Kualapura (M) Sdn Bhd and Lintang Emas Sdn Bhd to retain the offer that had lapsed on Feb 4.

In an announcement to Bursa Malaysia, HLBB said it had received a letter from Kualapura and Lintang Emas dated Feb 5, saying they had called for an EGM to appoint eight additional directors to EONCap’s board.

Both Kualapura and Lintang Emas are owned by Rin Kei Mei, who has a 15.4% stake in EONCap.

“In light of the above, Kualapura and Lintang Emas had requested for HLBB to maintain the offer to EONCap for a period of 14 days after the date of the EGM.

“HLBB had today replied to Kualapura and Lintang Emas that HLBB is unable to consider their request as the board of EONCap had rejected the offer and HLBB has not been informed of any change in the board of EONCap’s position,” HLBB said in the statement yesterday.

Industry observers said HLBB could be leaving the door open for EONCap’s board, although the offer had already lapsed.

A source close to the matter said HLBB did not want to be entangled in EONCap’s board tussle, believing that the tussle should be resolved first, before they came back to HLBB on another potential takeover offer.

“At this point of time, HLBB is saying ‘thanks, but no thanks’. But if EONCap is still interested in getting HLBB as a suitor for the banking group after the board tussle is resolved, HLBB may consider being an acquirer again,” the source added.

Interestingly, Rin, who is said to be eyeing RM7.70 per share for his stake in EONCap, did not ask HLBB for a revision in the offer price in the letter.

Industry observers said the takeover deal could be a long-drawn affair as EONCap’s single largest shareholder, Primus Pacific Partners, said to be resisting the proposed deal, is expected to launch a legal battle to stop Rin from holding the EGM to appoint new directors to the board.

Last Tuesday, EONCap’s board, though not unanimous, had rejected HLBB’s offer to acquire the company’s assets and liabilities for RM7.10 per share or at 1.4 times book value. EONCap board said it had resolved not to table the offer to shareholders at a general meeting as it believed it was not “in their favour”.

EONCap had said earlier that the offer price was too low and undervalued the banking group.

Subsequently, on Feb 4, Rin called for the appointment of an additional eight directors to the board via an EGM on Feb 22.

Rin and Sarawak tycoon Tan Sri Tiong Hiew King had been in negotiations with HLBB to facilitate the takeover deal. Rin and Tiong hold a combined interest of 32.57% in EONCap. Tiong was not among the requisitionists for the EGM.

EONCap’s other major shareholders are Khazanah Nasional Bhd and the Employees Provident Fund, with 10% and 11.91%, respectively. Collectively, the four parties hold 54.48% of EONCap.

Rin, Tiong and Khazanah had earlier obtained Bank Negara Malaysia’s (BNM) approval to negotiate with HLBB over a possible equity divestment of EONCap to HLBB. The takeover saga took an unexpected twist when Mulpha International Bhd expressed its interest in acquiring a minority stake in the targeted banking group.

However, Mulpha has yet to receive approval from BNM to begin negotiations with EONCap on the deal.


This article appeared in The Edge Financial Daily, February 9, 2010.