UBG rejects EPF offer for RHB

PETALING JAYA: Utama Banking Group Bhd (UBG) has rejected Employees Provident Fund’s (EPF) offer to buy its (UBG’s) 32.9% stake in Rashid Hussain Bhd (RHB), the majority shareholder of RHB Bank.  

UBG announced to Bursa Malaysia that it wrote to EPF yesterday to inform the latter that it “was unable to consider the EPF offer to acquire the entire stake of UBG in RHB as the offer was significantly below the company’s valuation of its entire stake in RHB.” 

That would be a surprise to the stock market as prices of the stocks of RHB companies and UBG were rising and actively traded this week in anticipation of UBG accepting EPF’s offer.  

In view of that, RHB rose 5 sen to RM1.27 yesterday on a volume of 16.4 million shares while RHB Capital was up 3 sen to RM2.60.  

On the other side, UBG increased 9 sen to RM1.12 on a volume of 6.6 million shares while the share price of its parent company, Cahya Mata Sarawak Bhd, went up 11 sen to RM1.06.  

UBG’s rejection of the EPF offer would be a disappointment, initially, for the minority shareholders of these companies as it would mean a delay in a general offer for RHB, or it might not occur at all.  

There had been news that seemed to indicate UBG was willing to make a deal based on EPF’s offer. Earlier this week, Datuk Seri Sulaiman Abdul Rahman Taib resigned as a director of UBG. Earlier, in June, he resigned as chairman and director of RHB.  

The announcement that UBG rebuffed EPF’s offer was, of course, a disappointment for EPF. What will EPF do next? The ball is now in its court. EPF may have to consider whether it should raise its offer price.  

UBG did not state the details of the EPF offer except that it was inadequate. The former had announced in June that it had received an offer from EPF for all its shares and irredeemable convertible unsecured loan stocks in RHB.  

EPF reportedly offered about RM1.60 to RM1.80 a share for RHB shares while UBG was looking for a price of just over RM2 a share.  

Governmental institutions EPF and Kumpulan Wang Amanah Pencen (KWAP) own a combined 41.4% stake in RHB, exceeding that held by UBG.  

The EPF is believed to want to lock in a much larger stake so that it can ensure its proposals to restructure RHB will secure sufficient support at an EGM of shareholders. Support of 75% of the votes cast at an EGM is required to pass special resolutions.  

A restructuring exercise is required at RHB because it held borrowings of RM3.4bil as at end-March, and dividend income from RHB Capital is insufficient for it to repay those debts.  

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