Cimb Group Holdings Berhad Case Study

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As the Associate Analyst in RAM Holdings Berhad, we chose to discuss on the merger and acquisition between CIMB Group Holdings Berhad (CIMB), RHB Capital Berhad (RHBCAP) and Malaysia Building Society Berhad (MBSB). Mergers involve the integration of two organisations to establish one entity while acquisitions involve one organisation being taken over by another (EduPristine, 2017). The three-way merger was proposed with the intention of creating one of Southeast Asia’s biggest financial institutions and the world’s largest Islamic bank, with a value of RM 72.5 billion that will replace Malayan Banking Berhad (MAYBANK).

On 9th October 2014, CIMB, RHBCAP and MBSB announced that they have made an application to Bank Negara Malaysia (BNM) to seek approval for its proposed merger. Based on speculations, the deal was structured in such a way whereby RHBCAP was to acquire CIMB for RM 60.6 billion because it is easier for shareholder approval due to the smaller size of the entity. The merge involved the disposal of CIMB assets and liabilities to RHBCAP through a share swap with an exchange ratio of 1 RHBCAP share to 1.38 CIMB shares (Gurmeet, 2015). The swap quotes one CIMB to RHBCAP share at RM 7.27 and RM 10.03 respectively. CIMB shareholders will own 70% of the merged entity whereas the remaining 30% will be owned by RHBCAP shareholders (Lin Say, 2014). The merged entity will have an estimated worth of RM 613.7 billion for its combined

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