3-WAY MERGER: CIMB, RHB CAP & MBSB

3-WAY MERGER:CIMB, RHB CAP & MBSBPresented By:ABD SYAFIQ BIN ABD RAZAK (G1317765)SYAIFUL ASYRAF BIN AHAMIDI (G1317817)NUR ATIQAH BINTI YAHAYA (G1318226)

IntroductionMerger:Two firms join together to form one firmThe new firm then will experienced increase in value and decrease in competitionIndustry Analysis

Adopted from: Affin Investment Bank: Sector Update as at 11th July 2014 (before merger proposal)BACKGROUND OF COMPANIES3-way merger9th October 2014, ThursdayKuala Lumpur: CIMB Group Holdings Berhad (CIMB Group), RHB Capital Berhad (RHB Capital) and Malaysia Building Society Berhad (MBSB) announced that an application has been made to Bank Negara Malaysia to seek approval for its proposed three-way merger. The merged entity will be a major ASEAN financial powerhouse and a mega-Islamic bank.

Source: http://www.cimbbizchannel.com/index.php?ch=352&pg=1220&ac=2376&bb=attachment_2

CIMB (Commerce International Merchant Bankers Group )Second largest financial services provider in Malaysia. Among the leaders in Asian banking industry.Services covering corporate and investment banking, consumer banking, treasury, insurance and asset managementHQ in Jalan Semantan Damansara Height Kuala LumpurBusiness includes Malaysia, Indonesia, Singapore, Thailand, Cambodia, Brunei, Vietnam, Myanmar and Laos. Listed on Bursa Malaysia via CIMB Group Holdings Berhad (CIMB 1023)RHB (Rashid Hussain Banking Group )ASPIRATIONSTop 3 in Malaysia or Top 8 in ASEANStrong market leadership in MalaysiaRegional powerhouse in ASEANMBSB (Malaysian Building Society Berhad)Jalan Dungun, Damansara Height Kuala LumpurLocation MBSB is an Exempt Finance Company Granted by Ministry of Finance on 1 March 1972 and the status has remained sinceMany services, among of them are Granting loans on the security of freehold and leasehold properties. Operates property development and leases real property through subsidiaryA company incorporated under the companies ACT 1965 and is a scheduled institution as defined under the Banking and Financial Institution Act 1989 (BAFIA)Allows bank to do finance business without banking licenseLargest shareholder: Employee Provident Fund (EPF) (64.5%)MERGER PROCESSTerms of OfferCIMB group dispose of all its assets and liabilities of RHB Cap via share swap with exchange ratio of 1 RHB Cap for 1.38 CIMB Group shares.The exchange ratio is based on a benchmark price of RM7.27 per CIMB Group and RM10.03 per RHB Cap share translating into a price-to-book value (P/BV) ratio of 1.7 times and 1.44 times for CIMB Group and RHB Cap, respectively.This valuation is based on CIMB Group and RHB Caps book values of RM4.28 and RM6.97 as at June 30In terms of the all-share swap for the merger, this will require an issuance of 6.04 billion new RHB Cap shares and enlarge the share capital of RHB Cap to 8.61 billion shares.CIMB Islamic will acquire all the assets and liabilities of MBSB at RM7.77 billion, or RM2.82 per share.MBSB shareholders will have a choice either to accept cash or new shares in the unlisted CIMB Islamic group.At RM2.82 per MBSB share, this represents a P/BV of 1.91 times.10Chronological EventsISSUES & RESULTSIssuesIf the merger is successful:

CIMB will own 70%RHB will own 30%ResultMergerFailed14 January 2015CIMB Bank

RHB Bank

MBSB

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