Malaysia's EON Capital shares up on reported Primus Pacific buy; MGO unlikely

13.07.2007 04:52
Malaysia's EON Capital shares up on reported Primus Pacific buy; MGO unlikely

KUALA LUMPUR (Thomson Financial) - Shares of Malaysian banking group EON Capital Bhd were higher in midmorning trade after Hong Kong-based fund Primus Pacific Partners was reportedly given approval to start negotiations for the acquisition of a stake in EON Capital from its shareholders.

At 10.20 am, EON Capital was up 10 sen or 1.3 percent at 8.05 ringgit. Citing unidentified sources, the Star newspaper reported Thursday Primus Pacific Partners has outbid Newbridge Capital Bhd and Temasek-controlled Malaysian Plantations Bhd for the 51 percent block put up for sale by DRB-Hicom, Rin Kei Mei and other shareholders.

The Primus Pacific Partners offer is believed to be between 9.25-9.50 ringgit per share, the Star report said.

ABN Amro has been appointed to place out the block and facilitate the sale of EON Capital shares, it said.

DRB-Hicom, which controls 20.2 percent of EON Capital, earlier said trading in its shares has been suspended pending the announcement on a major corporate exercise involving the proposed acquisition of a substantial asset.

OSK Investment Bank research analyst Chan Ken Yew said given that Malaysian law does not allow an institutional investor to hold more than 20 percent in a bank, the reported Primus Pacific Partners offer, if materialises, is unlikely to trigger a mandatory general offer (MGO) for EON Capital.

Based on historical trend, EON Capital's share price is likely to trade at a discount of about 10 percent to the offer price, until the offer becomes unconditional, said Chan. Chan is keeping his 'trading buy' call on EON Capital although the current share price has surpassed his target price of 7.50-7.70 ringgit.

'We maintain our trading buy call until we get a clearer picture on the identity of the potential acquirer, hence the probability of launching a MGO,' he said. The rating may be downgraded in the absence of a MGO, he said.

(1 US dollar = 3.44 ringgit)

Source : AFX News.