RHB and CIMB abandon the merger

From The Edge

CIMB Group Holdings Bhd. ( Financial Dashboard) and RHB Capital Bhd. ( Financial Dashboard) 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 ( Financial Dashboard).

The news that RHB and CIMB have abandoned the merger is good news for CIMB in particular, the shareholders.  Now, the only way to get those two entities to merge is for the EPF to offer an MGO for the shareholders, but that won't be cheap.  Shareholders have voted, leave them to their own devices.

From day one, the RHB and CIMB mergers were seen as rough for CIMB shareholders, especially in the view that RHB would take over the banking business.   The merged entity would mostly be merged from CIMB to the RHB banking entity.  Thus the reason why arbitrageurs  decided CIMB should gravitate towards RHB's book value.

CIMB is known as a relatively high performing bank culture.  Merging is all and well, but most shareholders would rather not do the merger considering CIMB already has their plate full with integration of banks from overseas.