Proposed AMMB-RHB merger talks called off

KUALA LUMPUR, 22 Aug 2017: 

RHB Bank and AMMB Holdings (AmBank) have dropped plans for a merger – on grounds that both could not arrive at mutually acceptable terms.

In a joint statement filed to the bourse, RHB Bank and AmBank said that “after much discussion and deliberation, (both parties) were not able to reach an agreement on mutually acceptable terms and conditions for the proposed merger.”

The banks have “mutually agreed to end discussions on the proposed merger of the two banking groups”.

The banks said they will continue with their respective business strategies, at the cessation of the three-month long negotiations.

Sources had earlier said the deal was likely to be called off.

The merger talks began in June after receiving the Malaysian central bank’s blessing to start. RHB had said it planned to acquire AmBank in an all-stock deal.

The Malaysian central bank has encouraged consolidation of the sector, although deals have proved hard to conclude.

RHB, CIMB and Malaysian Building Society started negotiations in 2014 over a US$20 billion three-way merger to create Malaysia’s largest bank, but talks collapsed in 2015.

A successful takeover of AmBank – which has a market value of RM14.16 billion – would reinforce RHB‘s ranking as the fourth-largest Malaysian bank by assets behind Maybank, CIMB Group Holdings and Public Bank. AmBank is the sixth-biggest.

A source familiar with the matter said deal talks have stumbled over valuation because of contingent liabilities.

RHB and AmBank, which had requested for that trading in their shares be halted today, will resume trading tomorrow.

Australia and New Zealand Banking Group, a 24% shareholder in AmBank, had been looking to divest its stake through the sale, though Malaysian retirement fund KWAP may yet buy the holding. It was reported in July that they were in negotiations over a US$900 million deal.

– Reuters

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