News
COMPETITIVE BIDDING: THE WAY FORWARD
16 November 2006
MSWG welcomes the move by Bank Negara Malaysia (BNM) to allow its regulated licensed institutions to negotiate potential mergers and acquisitions with more than one party simultaneously. This new ruling applies to parties intending to enter into negotiation for the acquisition or disposal of 5 per cent interest or more in licensed institutions regulated by BNM.
MSWG had in March 2006 issued a statement pertaining to the takeover of Southern Bank Berhad by Bumiputra-Commerce Holdings Berhad where we raised the point that the authorities should allow banks to have competitive bidding in a takeover process. However, during the BCHB-SBB takeover saga, banks could only negotiate with one prospective buyer at a time. We are now pleased to see that the Central Bank has now relaxed this restriction and allowed multiple bidding, which will encourage or even spur merger and acquisitions to be a market driven process.
This move will augur well for shareholders of target banks, broadening the shareholder base, particularly minority shareholders. Potential acquisitions will facilitate change in control in a company at fair value and the premium attached thereto should ultimately benefit all shareholders. Therefore, the ability to obtain bids from multiple parties simultaneously will result in more competitive bids and offer terms, as well as fair and attractive pricing, which bodes well for shareholders, especially the minority shareholders. Banks will be able to consider multiple terms of offers and their board of directors will be in a better position to decide which offer that they believe gives the best value to all its stakeholders.
The new ruling is timely as Malaysia moves the agenda for the financial sector reform and deepening deregulation. It is a positive signal that will encourage foreign investors to participate in our capital market, particularly the banking sector to create more robust and competitive financial institutions.
Banks can now look at broadening shareholder base with possible foreign investors’ participation to drive dynamic growth and market capitalisation as well as shareholder value from capital appreciation in cross border network and strategic alliances.
MSWG is of the view that appropriate flexibility and transparency must be at the heart of the financial sector’s liberalisation and economic resilience to respond readily and efficiently for consolidation and competitiveness in the global banking industry.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 16 November 2006
16 November 2006
MSWG welcomes the move by Bank Negara Malaysia (BNM) to allow its regulated licensed institutions to negotiate potential mergers and acquisitions with more than one party simultaneously. This new ruling applies to parties intending to enter into negotiation for the acquisition or disposal of 5 per cent interest or more in licensed institutions regulated by BNM.
MSWG had in March 2006 issued a statement pertaining to the takeover of Southern Bank Berhad by Bumiputra-Commerce Holdings Berhad where we raised the point that the authorities should allow banks to have competitive bidding in a takeover process. However, during the BCHB-SBB takeover saga, banks could only negotiate with one prospective buyer at a time. We are now pleased to see that the Central Bank has now relaxed this restriction and allowed multiple bidding, which will encourage or even spur merger and acquisitions to be a market driven process.
This move will augur well for shareholders of target banks, broadening the shareholder base, particularly minority shareholders. Potential acquisitions will facilitate change in control in a company at fair value and the premium attached thereto should ultimately benefit all shareholders. Therefore, the ability to obtain bids from multiple parties simultaneously will result in more competitive bids and offer terms, as well as fair and attractive pricing, which bodes well for shareholders, especially the minority shareholders. Banks will be able to consider multiple terms of offers and their board of directors will be in a better position to decide which offer that they believe gives the best value to all its stakeholders.
The new ruling is timely as Malaysia moves the agenda for the financial sector reform and deepening deregulation. It is a positive signal that will encourage foreign investors to participate in our capital market, particularly the banking sector to create more robust and competitive financial institutions.
Banks can now look at broadening shareholder base with possible foreign investors’ participation to drive dynamic growth and market capitalisation as well as shareholder value from capital appreciation in cross border network and strategic alliances.
MSWG is of the view that appropriate flexibility and transparency must be at the heart of the financial sector’s liberalisation and economic resilience to respond readily and efficiently for consolidation and competitiveness in the global banking industry.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 16 November 2006
