K&N
Kenanga has sealed the deal to purchase ECM Libra’s investment bank and
stockbroking businesses for rm875 million. The purchase will be satisfied by
rm650 million and the issuance of 95 million ULS and 120 million new Kenanga
shares to ECM Libra.
The price tag values at 1.27 times over is book value of rm688 million
as at Jan 31, 2012.
The total payout for the deal is 68 sen pre share, while the new
Kenanga shares and loan stocks are valued at 63 sen and five sen each
respectively.
If the deal goes through, ECM will have another 12 months to find a new
business. After the divestment ECM will retain its asset management and unit
trust business. It will also have a sizeable cash to acquire assets.
Upon completion of the deal, Kenanga will emerge as one of the three
largest stockbroking outfits in Malaysia .
The deal cannot be satisfied entirely in cash as Kenanga does not have the
financial muscle. The loan stock deal would also prevent ECM from holding a large
stake in Kenanga. The 120 million Kenanga shares issued in the deal will see
ECM Libra emerge with a 16.39% stake in Kenanga.
ECM Libra’s major shareholder is Tan Sri Azman with a 16.18%
stake. He also holds 17% stake in AMMB Holdings.
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