by Izwan Idris
The Sun
23 June 2011

LUMPUR (June 23, 2011): Malayan Banking Bhd (Maybank) and CIMB Group have announced separately that they have aborted plans to take over RHB Capital Bhd.

“In light of recent developments and following further deliberations, the board of directors of Maybank has decided not to pursue the possible merger at this juncture,” Maybank said in a short statement to Bursa Malaysia today.

Maybank and its biggest local rival CIMB Group had obtained Bank Negara Malaysia’s approval last month to start merger talks with RHB Capital.

The announcement from Maybank was released after trading on Bursa Malaysia ended for the day.

In a statement, CIMB said it has ceased negotiations with RHBCap on a potential merger exercise.

CIMB Group chief executive Datuk Seri Nazir Razak said: “Based on our various discussions and our assessment of the present expectations of key stakeholders, we do not believe that we will be able to arrive at a value creating merger.

“Merger negotiations are both resource consuming and distracting for staff and stakeholders. Therefore, we prefer not to prolong our discussions unnecessarily, allowing all parties to return to ‘business as usual’ as soon as possible.”

CIMB Group’s Board also stated its sincere appreciation to RHB’s board of directors and management for agreeing to engage and participate in discussions.

Shares in RHB Capital plunged 57 sen, or 5.9% to close at RM9.03, while Maybank declined 2 sen to close at RM8.82 and CIMB 4 sen lower to end at RM8.51.

Singapore’s Straits Times reported today that Maybank and CIMB had decided to drop separate plans to acquire RHBCap.

Citing executives close to the situation, it said both banks have informed Bank Negara about their decision to abandon merger plans with RHBCap, which has a market value of around US$7 billion.

The decision came after one of RHB’s shareholders, Abu Dhabi Commercial Bank (ADCB), signed the sale agreement of its 25% stake in RHB with Abu Dhabi-based investment fund Aabar Investments for RM10.80 per share, said the report.

The sources said the stake sale by ADCB has complicated the proposed takeover. Maybank and CIMB officials were not immediately available for comment.

“Pricing wise, the takeover doesn’t make much sense now. There is going to be a cooling down and the two banks may revisit the prospect of a merger with RHB at some other time,” a senior financial executive, who spoke on condition of anonymity, was quoted as saying by Straits Times.

A takeover by Maybank would have created the biggest banking group in Southeast Asia by market value, exceeding Singapore’s DBS while a CIMB-RHB combination would rank just below DBS.

Credit Suisse is advising RHB on the transaction while Nomura is helping Maybank.