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Maybank IB Maintains 'Hold' Call On CIMB Group
The three parties have received approval from Bank Negara Malaysia to begin merger talks and have entered into a 90-day exclusivity agreement to negotiate and finalise the pricing, structure and other relevant terms and conditions.
In a research note today, Maybank IB said assuming a share swap into CIMB shares at the latest closing prices, the deal would cost CIMB RM28 billion.
"This will translate to a share swap of 1.2 CIMB shares for every one RHB Cap share and 0.3 CIMB share for every 1 MBSB share," it added.
Maybank IB said assuming the acquisition cost of RM28 billion, CIMB is estimated to issue 3.9 billion new shares, which will enlarge its share capital base by 47 per cent.
It noted that this will result in a ballooning of the group's shareholder's funds to RM68 billion from RM40 billion, relatively larger than Maybank's RM48 billion.
Maybank IB also estimates the merger to be neutral on CIMB FY15's earnings per share at just seven per cent post merger enhancement.
The return-on equity is estimated to be diluted to 11.8 per cent, with an anticipated 17 per cent increase in the group's book value per share to RM.5.56 post-merger.
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