K&N Kenanga Holdings Bhd is buying ECM Libra Investment Bank Bhd for RM875.1mil, of which RM659.61mil would be in cash and the rest in shares and loan stocks.
For the remaining RM215.5mil, Kenanga Holdings will issue 120 million new shares worth RM1 each and RM95.5mil in redeemable non-convertible unsecured loan stocks to ECM Libra Financial Group Bhd (ECMLFG).
On Friday, Kenanga Holdings and Kenanga Investment Bank Bhd (KIBB) entered into a conditional share purchase agreement with ECMLFG to acquire the paid-up share capital of ECM Libra Investment Bank.
"The purchase consideration is at a premium of RM187.4mil over ECM Libra Investment Bank's audited consolidated net assets of RM687.7mil as at Jan 31, 2012, and represents a price-to-book ratio of approximately 1.27 times," Kenanga said.
It said the purchase consideration was based on ECM Libra Investment Bank's audited consolidated net assets of RM653mil and RM687.7mil as at Jan 31, 2011 and Jan 31, 2012 respectively.
It was also based on the audited consolidated net tangible asset of RM589.8mil and RM635.2mil as at Jan 31, 2011 and Jan 31, 2012 respectively.
Other factors were ECM Libra Investment Bank's financial performance, earnings potential and future prospects and the implied multiples of selected comparable precedent transactions.
Kenanga also said the other factors considered were that the merged entity would be able to operate with a level of capital lower than the existing capital of both investment banks combined and the potential synergies and benefits arising from the proposed acquisition to Kenanga and its subsidiaries.
Source: www.thestar.com.my
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