KUALA LUMPUR: The boards of RHB Capital Bhd and MBSB Bhd which met separately yesterday, have agreed to a proposed merger with CIMB Group Bhd — subject to conditions, sources say.

Sources close to the merger talks say that the two boards deliberated for several hours before deciding that they will support only on terms acceptable to them. Each have asked CIMB to revert to them on certain requests, including that which are related to valuation.

“They have set their terms for the merger, so now it’s up to the CIMB board which will meet tomorrow (today) to deliberate,” says a source. “If the CIMB board agrees to the terms then it looks like a done deal although they will still need more time to work out the details.

It is understood that the board of RHB and MBSB will also meet again today. Today marks an important date as the 90-day exclusivity period for the three parties to thresh out a deal, comes to an end.

Aside from getting approvals from the respective boards, approval is also needed from Bursa Malaysia to allow the Employees Provident Fund (EPF) to vote at shareholders meeting of the three companies.

If the EPF is allowed to vote, the proposal will likely be carried at the shareholders meetings as it has substantial interests in all three

The Edge Financial Daily recently reported that the United Arab Emirates government had contacted Malaysia’s Prime Minister Datuk Seri Najib Razak to express its concerns over the EPF’s right to vote in the merger.

Under the current Bursa Malaysia’s listing rules, the EPF would have been prevented from doing so as it is a substantial shareholder of all three parties. However, it is learnt that RHB Cap and MBSB had written to the regulator to seek a waiver from complying with the rules.


This article first appeared in The Edge Financial Daily, on October 8, 2014.