Type	Announcement
Subject	MALAYAN BANKING BERHAD ("Maybank" or "the Company") - Proposed Acquisition Of Phileo Allied Bank Berhad, Phileo Allied Securities Sdn Bhd And Their Respective Subsidiary Companies ("Proposed Acquisition")

Contents :

Aseambankers Malaysia Berhad on behalf of Malayan Banking Berhad ("Maybank"), is pleased to announce that Maybank has entered into a conditional sale and purchase agreement ("Agreement") with Phileo Allied Berhad ("PAB") and Phileo Allied Finance (Malaysia) Berhad ("PAF") today for the proposed acquisition of the entire issued and paid-up share capital of Phileo Allied Bank (Malaysia) Berhad ("PABB"), Phileo Allied Securities Sdn Bhd ("PASSB") and their respective subsidiary companies as specified hereafter ("the Proposal").

The board of directors of Maybank and PAB have approved the Proposal. Bank Negara Malaysia ("BNM") has confirmed that the Minister of Finance ("MOF") has allowed Maybank to sign the Agreement, subject to the final approval from the MOF. The Agreement shall supersede the previous Memorandum of Agreement dated 30 June 2000 signed between Maybank and PAB whereby Maybank offered to merge with PAB under a shareholders scheme of arrangement pursuant to Part VII (Arrangement and Reconstructions) of the Companies Act, 1965 via a share exchange.

2. THE PROPOSAL

Pursuant to the Agreement, Maybank shall acquire from PAB its entire shareholdings in PASSB including all its subsidiaries, and from PAB and PAF their entire shareholdings in PABB including all its subsidiaries except for three (3) subsidiaries, namely Phileo Allied Options and Financial Futures Sdn Bhd, Phileo Allied Unit Trust Management Sdn Bhd and Phileo Asset Management Sdn Bhd (the "Excluded Subsidiaries") which will be reacquired by PAB as part of the Proposal (the companies to be acquired by Maybank hereinafter collectively referred to as "the Subject Companies").



The Consideration for the acquisition of PABB and PASSB shall be a cash consideration of RM1,300 million and the purchase consideration for the reacquisition of the Excluded Subsidiaries will be RM20 million.

The Consideration shall be paid by Maybank as follows:

(a) a deposit of RM130 million to the stakeholders upon the execution of the Agreement; and

(b) the balance is to be paid on the completion date.

Internally generated funds will be used by Maybank to finance the proposed acquisition.

The Consideration was arrived at on a willing buyer - willing seller basis after taking into consideration, among others, the audited net tangible assets of the Subject Companies as at 31 January 2000, the due diligence findings and also future earnings potential of PABB and PASSB. The group net profit before transfer to statutory reserve for both PABB and PASSB were RM220.6 million and RM22.6 million, respectively based on the audited financials as at 31 January 2000.

The consideration of RM1,300 million represents approximately 1.25 times the combined net assets value of the PABB and PASSB which approximates RM1,041 million as at 31 January 2000.

3. CONDITION PRECEDENTS

The Proposal is subject to and conditional upon, inter-alia, the followings:

(a) approvals being obtained from:

i MOF/BNM
ii Foreign Investment Committee (FIC);
iii Securities Commission (SC), if necessary;
iv shareholders of Maybank at an Extraordinary General Meeting to be convened for the Proposal (if required);
v shareholders of PAB at an Extraordinary General Meeting to be convened for the Proposal; and
vi any other relevant authorities, if required.

(b) full settlement of all inter-company advances owed to the Subject Companies; and

(c) approvals for reacquisition of the Excluded Subsidiaries by PAB shall have been approved.

4. RATIONALE FOR THE PROPOSED TRANSACTION

The impending globalization and liberalization of the financial industry will continue to pose great challenges to Malaysian financial institutions. To attain its long term objective of a sound and resilient financial system, the government is encouraging financial institutions to rationalize and consolidate. Local financial institutions are currently undergoing various mergers and consolidation exercises to address these challenges ahead.

Following the completion of the Proposal, it is intended that the banking business of PABB being acquired will be merged with that of Maybank and the securities business of PASSB will be merged into Mayban Securities Sdn Bhd. The merger exercise will provide the combined entity with opportunities to synergise and to enhance its banking services, stockbroking, bancassurance and investment management. In addition, the combined entity will be able to benefit from economies of scale and synergies through cross selling of its products and services to an enlarged customer base. The Proposal and the contemplated merger are in tandem with Maybank’s strategy to further strengthen its position as the preeminent financial services group in Malaysia.

5. BACKGROUND INFORMATION

MAYBANK

Maybank was incorporated in Malaysia on 31 May 1960 with an authorised share capital of RM20 million and an issued and paid-up share capital of RM7.5 million initially. As at 30 June 2000, Maybank has an authorised share capital of RM4 billion and issued and paid-up share capital of RM2.3 billion, with a Group shareholders’ funds of RM10.4 billion and total assets of RM127.3 billion.

Maybank is principally engaged in commercial banking business whilst its subsidiary companies are engaged in merchant banking, finance, leasing, hire-purchase, general and life insurance, discount house business, factoring, stockbroking, venture capital, trustee, nominee services, property trust, unit trust and futures broking.

PABB

PABB was incorporated in July 1994 as AlliedBank (Malaysia) Bhd and subsequently changed to the present name on 28 April 1997. PABB has authorised share capital of RM2,000,000,000 consisting of 2,000,000,000 ordinary shares of RM1.00 each and issued and paid-up share capital of RM704,000,000 consisting of 704,000,000 ordinary shares of RM1.00 each. PABB offers complete and comprehensive range of financial services and investment choices, innovative, tailor-made financial products, delivery channels through the creative use of information technology to its customers.

Currently, PABB has 32 commercial banking branches (including bank’s kiosks) nationwide.



PASSB

PASSB was incorporated on 1 December 1975 and is a member company of the Kuala Lumpur Stock Exchange and a wholly-owned subsidiary of PAB. PASSB has authorised share capital of RM100,000,000 consisting of 100,000,000 ordinary shares of RM1.00 each and issued and paid-up share capital of RM100,000,000 consisting of 100,000,000 ordinary shares of RM1.00 each. PASSB is based in Ipoh, Perak with a branch research office in Kuala Lumpur and is a full-service stockbroking house that offers a comprehensive range of products and services to local and international institutional clients and retail customers.

6. FINANCIAL EFFECTS

6.1 Share Capital

The Proposal will not have any effect on the share capital of Maybank.

6.2 Earnings

The Proposal is expected to contribute positively to the future earnings of Maybank.

6.3 NTA

The Proposal is not expected to have any material effect on the NTA of Maybank.

7. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

Insofar as the Directors of Maybank are aware, none of the Directors or substantial shareholders of Maybank or any person connected with them has any interest, direct or indirect, in the Proposal.

8. DIRECTORS’ OPINION

After due consideration of all aspect of the Proposal, the Board of Directors of Maybank is of the opinion that the Proposal is in the best interest of Maybank.

9. APPLICATION TO THE SC

Barring unforeseen circumstances, the application to the SC, if necessary, will be made within three (3) months from the date of this announcement.

10. ADVISERS

Aseambankers Malaysia Berhad and J.P. Morgan act as financial advisers to Maybank.

11. DOCUMENTS FOR INSPECTION

The Agreement is available for inspection at its Registered Office, 14th Floor, Menara Maybank, 100, Jalan Tun Perak, 50050 Kuala Lumpur, during normal business hours from Monday to Friday (except for public holidays) for a period of three (3) months from the date of this announcement.

 

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