CIMB and RHB said planning to abandon Malaysia’s biggest merger

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SINGAPORE (Jan 13): CIMB Group Holdings Bhd. and RHB Capital Bhd. are planning to scrap the three-way merger that would have created Malaysia’s largest banking group, said people with knowledge of the matter.

Terms for the deal, announced in October, no longer make sense as the industry outlook worsens, said the people, who asked not to be named because deliberations are private. An announcement could come as soon as this week, one person said. The proposed combination also included the acquisition of smaller lender Malaysia Building Society Bhd.

The merger would have been Malaysia’s largest ever if completed, and it was the biggest Asian M&A transaction announced in the fourth quarter, data compiled by Bloomberg show. CIMB and RHB had weighed renegotiating terms of the deal, valued at 72.5 billion ringgit ($20.3 billion) when it was unveiled, people familiar with the matter said last week.

CIMB shares rose as much as 3.5 percent in early trading in Kuala Lumpur today, while RHB advanced 0.9 percent. Malaysia Building Society fell as much as 3.2 percent.

Effendy Shahul Hamid, chief marketing and communications officer at CIMB, declined to comment when contacted by phone today, and an RHB spokesman couldn’t immediately be reached. Edge newspaper reported the plans to scrap the deal earlier today, citing unidentified people.