Long awaited offer is out. Hong Leong bank offer RM7.10 cash for a share in EONCAP make the deal worth RM4.9 billion. The deal does not come with a share conversion option, which signify shareholders cannot convert their existing EONCAP shares to HLB shares. I consider this as a lose to existing shareholders. If the deal is successful, this will create the 4th largest bank in domestic front in Malaysia, surpassing RHB, currently is the no4.
According the announcement, 7.10 is arised from premium of 31.5% to the 180-day volume weighted average price ("VWAP") of EON Capital shares as at 16 December 2009.This is no fair enough because they use 180VWAP instead of 30VWAP,because the past 6 months is the tough time for financial sector and dampened by economy crisis. And secondly, calculation are as at 16 DEC, which is a month ago, they ignore the current performance and transformation by EON bank and those bought its share recently.
RM7.10 is just merely 1.4times Price to Book value of EONCAP as EONCAP has more than RM5 book value per share. In comparison when CIMB bought the Southern Bank, CIMB paid 2.1times PBV. 1.4 times PBV is perhaps among the lowest offer after the consolidation of local banks in the past.
Frankly speaking, I have bought few lot of EONCAP before this. I was not speculating, but after taking into acount the strong balance sheet, reputation, transformation done, growth prospect of EONCAP and careful research and study has been carried.
I am not happy with the price, and there is no option given to us to choose between share conversion and cash. With RM7.10, I actually has make money from it. But I not satisfied when HLB is a way of far undervalueing EONCAP.
I will going to vote against the propose merge in the coming EONCAP EGM in coming weeks!
Hope those face the same fate will join me.
Thank You.
Subscribe to:
Post Comments (Atom)
~~ $$$ dropping by ~~
ReplyDeleteThe final dividend is in addition to the previous first special dividend and capital repayment paid on June 21 and September 23 this year respectively, which amounted in total to RM7.76 per share, EONCap said in a statement yesterday.
ReplyDeleteAt EONCap’s extraordinary general meeting on September 22, the board of directors had expected that the company would be able to pay a final special dividend of 2.45 sen per share to shareholders after settling operational and other expenses incurred until the eventual winding-up of the company.
sell structured settlement