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Publish Date : 11-Oct-2014

CIMB Group Holdings Berhad ("CIMB Group"), RHB Capital Berhad ("RHB Capital") and Malaysia Building Society Berhad ("MBSB") announced today 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. “We are extremely pleased to have been able to reach this stage in the process. This exercise will cement CIMB Group’s position amongst the top banks in ASEAN and bring a host of value creation opportunities for all our stakeholders. We are excited that we can now move forward and work towards seeking the necessary approvals to effect this merger,” said Tengku Dato’ Zafrul Tengku Abdul Aziz, Acting Group Chief Executive, CIMB Group.

Kellee Kam, RHB Capital Group Managing Director said, “I am glad that we have been able to come this far in our negotiations in such short a time. The RHB Banking Group has enjoyed tremendous progress in the last few years, seeing us grow from strength to strength. This merger is a natural step in our growth story, enabling us to become a regional financial powerhouse via the merged entity. The task ahead for us now is to ensure that we meet all the expectations of our stakeholders, thereby creating new opportunities for our employees, enhanced services and product offerings for our customers, and increasing returns and value for our shareholders.” The merger will see a share swap between CIMB Group and RHB Capital at an exchange ratio of 1.38 (1 RHB Capital share for 1.38 CIMB Group share). This is based on a benchmark price of RM7.27 per CIMB Group share and RM10.03 per RHB Capital share; translating into price-to-book ratios as at 30 June 2014 of 1.70 times and 1.44 times for CIMB Group and RHB Capital respectively. CIMB Group shareholders will own 70% of the merged CIMB-RHB Group (“Merged CIMB-RHB”) and RHB Capital shareholders the remaining 30%.

In tandem, CIMB Islamic, RHB Islamic and MBSB will merge to form a mega-Islamic Bank. This will be done at a price of RM2.82 per MBSB share, and MBSB shareholders will have the option of receiving cash or CIMB Islamic shares as consideration. It is envisaged that the newly created mega-Islamic bank will remain a subsidiary of the Merged CIMB-RHB in partnership with ex-MBSB and/or new strategic shareholders. “The strategic rationale for the merger and the subsequent creation of a mega-Islamic bank is clear and we’re focused on getting this to the finish line. This move charts another significant milestone in the history of MBSB since its inception and we are happy to be part of this corporate exercise,” said Dato’ Ahmad Zaini bin Othman, President and Chief Executive Officer of MBSB.

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