ECM/Kenanga Jun 2012

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.