PETALING JAYA: CIMB Group
and UK-based Aviva Plc are expected to finalise the buyers of their 51% and 49% stakes respectively in joint venture CIMB Aviva Assurance Bhd this week, according to a source with knowledge of the deal.
The deal was supposed to be finalised earlier but due to pricing, among others, it had been dragged. “As at press time, all the four suitors had submitted their prices for the stakes and CIMB and Aviva were running through the price of the bids to determine the best deal.
The delay was because the companies have to wait for the various bidders to submit their price for the stakes and this process takes time,'' the source told StarBiz. Reuters reported last month that CIMB had set Oct 29 as the deadline for the suitors to place binding bids.
CIMB had made a presentation to bidders as early as last month for them to assess the company and clear queries before putting in their offer prices. At this juncture, the three suitors, whose names had cropped up earlier, for the stakes are Prudential plc, Manulife Financial Corp and Sun Life Financial Inc. Khazanah Nasional is believed to be the fourth suitor which made a late bid. CIMB and Khazanah could not be reached for comments.
News has been rife in the market that the first three suitors, whichever one is successful in its bid, would buy Aviva's stake while Khazanah would buy CIMB's stake.
It was still not clear whether the bidders would take on the entire or a portion of Aviva and CIMB's stakes.
According to analysts, the disposal of the stakes could fetch up to US$500mil (RM1.52bil) which works out to 2.7 times price-to book-value. Analysts contacted also agreed that the price-to-book value at 2.2 times was somewhat in the fair range judging from the latest buyout of ING's Malaysian Insurance operations by AIA Group Ltd.
AIA paid 2.2 times price-to-book value for ING Malaysia at a price tag of US$1.73bil (RM5.31bil).
In a recent report, Kenanga Research noted that such strategic alliance would allow the winning bidder to distribute bancassurance products through CIMB's subsidiaries, including CIMB Bank, CIMB Niaga, CIMB Thai as well as Bank of Commerce Philippines, and create a new distribution channel not captured by the traditional insurance sales force.
The analyst believed that the company buying into CIMB Group's stake wanted a controlling stake. Hence, CIMB's stake post-sale would likely range between 25% and 30%, from its original 51%.
Another analyst with a bank-backed brokerage said there was still the possibility that CIMB would sell its entire stake in the joint venture if the buyer was an insurance outfit.
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