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UPDATE 2-Malaysia's RHB Bank and AmBank drop merger plans

Stock Markets Aug 22, 2017 22:30
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© Reuters. UPDATE 2-Malaysia's RHB Bank and AmBank drop merger plans
 
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(Updates with official announcement)

By Liz Lee

KUALA LUMPUR, Aug 22 (Reuters) - Malaysia's RHB Bank RHBC.KL and AMMB Holdings (AmBank) AMMB.KL have dropped plans for a merger on grounds that both could not arrive at mutually acceptable terms.

In a joint statement filed to the bourse, RHB Bank and AmBank said that "after much discussion and deliberation, (both parties) were not able to reach an agreement on mutually acceptable terms and conditions for the proposed merger."

The banks have "mutually agreed to end discussions on the proposed merger of the two banking groups."

The banks said they will continue with their respective business strategies, at the cessation of the three-month long negotiations.

Reuters reported earlier, citing sources, that the deal was likely to be called off.

The merger talks began in June after receiving the Malaysian central bank's blessing to start. RHB had said it planned to acquire AmBank in an all-stock deal. Malaysian central bank has encouraged consolidation of the sector, although deals have proved hard to conclude.

RHB, CIMB and Malaysian Building Society MBSS.KL started negotiations in 2014 over a $20 billion three-way merger to create Malaysia's largest bank, but talks collapsed in 2015.

A successful takeover of AmBank -- which has a market value of 14.16 billion ringgit ($3.31 billion) -- would reinforce RHB's ranking as the fourth-largest Malaysian bank by assets behind Maybank MBBM.KL , CIMB Group Holdings CIMB.KL and Public Bank PUBM.KL . AmBank is the sixth-biggest.

A source familiar with the matter told Reuters deal talks have stumbled over valuation because of contingent liabilities.

The source did not want to be named because the talks were confidential.

RHB and AmBank, which had requested for that trading in their shares be halted on Tuesday, will resume trading on Wednesday.

Australia and New Zealand Banking Group ANZ.AX , a 24 percent shareholder in AmBank, had been looking to divest its stake through the sale, though Malaysian retirement fund KWAP may yet buy the holding. Reuters reported in July that they were in negotiations over a $900 million deal. = 4.2790 ringgit)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Malaysia's RHB, AmBank in merger talks to form bank worth $9 bln

ID:nL3N1IY3F7 Doubts over merger drag on stocks of Malaysian lenders RHB and AmBank

ID:nL3N1IZ2BR

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

UPDATE 2-Malaysia's RHB Bank and AmBank drop merger plans
 

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