Eon Bank is one of the 10 so-called 'anchor' banks selected by Bank Negara in its attempt to force consolidation among Malaysia's 53 former financial institutions. However, Eon Bank -- 56.5% owned by car company Eon -- was unlisted which posed some obvious disadvantages.
Coincidentally, Lafarge of France had bought Malayan Cement which owns 77% of Kedah Cement and indicated it wished to restructure the two companies. Given the difficulties of achieving a primary listing in the moribund Malaysian equity markets, Eon recognized that the listed-shell left after Kedah had been restructured might prove useful.
What will happen is thus. Kedah will sell its cement operations to Malayan Cement for a cash consideration of M$1.08 billion. Meanwhile, Kedah Cement will raise around M$1 billion through debt and new equity and will then buy Eon Bank.
A general offer will be made to the minority shareholders that own 23% of Kedah. Eon is being advised by its in-house investment bank, MIMB.
From what FinanceAsia can understand, the idea is to create a listed banking group in which Eon's parent ups its current shareholding from 56.5%. However, the hope is to keep as many of Kedah's minorities in the new structure as possible in order to minimize the cost of the whole exercise.
Eon Bank is one of the smaller 'anchor' banks, with Eon being the company that sells Malaysia's Proton cars. The bank, however, is more than a consumer finance bank for a car company. It has 162 branches, 4,500 employees and one million customers. Its stated strategy is to focus on consumer finance, SMEs and selected corporate clients.