11 July 2012

AMMB Holdings Bhd has proposed to acquire MBF Holdings Bhd’s subsidiary MBF Cards (M) Sdn Bhd for a total cash consideration of RM623.4mil

AMMB Holdings Bhd has proposed to acquire MBf Holdings Bhd’s subsidiary MBF Cards (M) Sdn Bhd for a total cash consideration of RM623.4mil.

The companies told Bursa Malaysia yesterday that the proposed acquisition would include a 33.33% owned associate company of MBF Cards called Bonuskad Loyalty Sdn Bhd, whose principal business is conducting a customer loyalty scheme. The shareholders of MBF Cards are MBf Holdings and its wholly-owned subsidiaries, Atox Cards Sdn Bhd and Jastura Sdn Bhd, which hold 51%, 11.55% and 37.45% equity interest respectively in MBF Cards.

“Based on MBF Cards’ net asset value (add share of earnings of Bonuskad) and profits after taxes as per the audited financial statements for the financial year ended Dec 31, 2011, the purchase price would be adjusted to RM647.5mil. This translates to a price to book multiple of 2.8 times and a price to earnings multiple of 12.9 times accordingly,” AMMB said in a statement.

The acquisition is still pending the approval of, among others, the other shareholders, MBf Holdings and Bank Negara.

In the statement, MBfH said the reason it was selling was because the credit card business operated in a highly competitive market where MBF Cards competed principally with bank-backed card issuers.

“As it is dependent on bank borrowings or debts raised through the capital market, (our) ability to continuously raise funds will be increasingly challenging. Currently in the absence of deposits taking its cost of funds is generally much higher,” MBfH said.

“The board believes that the proposed disposal is timely and provides an opportunity for MBfH to unlock the value of its investment in MBF Cards at an attractive valuation. The proposed disposal is expected to result in a gain of approximately RM383.89mil (after deducting estimated expenses of RM2mil) based on the audited financial statements of the MBfH group for FY2011,” it said.

“The board is also of the opinion that it would be more beneficial to focus and utilise its existing resources on the other business divisions within the group,” it added.

AMMB’s chairman Tan Sri Azman Hashim said that the acquisition enhances the profile of its merchant acquiring and card issuance businesses with a greatly enlarged merchant network and an increase in receivables.

“It also fits well with our Retail Banking strategic priorities and aspirations, including stronger customer centricity, accelerating growth in deposits and non-interest incomes, building our wealth management and growing quality assets in targeted segments,” Azman said.

Meanwhile MBfH’s board said that it is still assessing and evaluating plans for the optimal utilisation of the money that will potentially receive from the proposed disposal which may include, but not limited to: the repayment of bank borrowings, working capital for its business operations in Papua New Guinea and Fiji or for the acquisition of viable businesses / assets.

“It is expected that the loss of contribution to the MBfH Group’s future earnings consequent to the proposed disposal will be mitigated by the higher contributions from other investments / businesses and interest savings arising from the application of the proceeds from the proposed disposal,” MBfH said.

Source: www.thestar.com.my


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