KUALA LUMPUR, Feb 3 — Bursa’s benchmark stock index was down 0.02 per cent at 1,263.47 by 1030am today.
The country’s seventh-largest bank was down 3 per cent at RM6.85 after it rejected bigger rival Hong Leong Bank’s US$1.45 billion (RM4.99 billion) offer for its banking assets.
“Given that Hong Leong Bank’s offer of RM7.10 has lapsed, coupled with the absence of credible counter bids, we have downgraded our fair value for EON back to our Gordon Growth-derived fundamental fair value of RM6.60, which values EON at 1.18 times book for 2010,” said OSK Investment Bank in a research report.
Hong Leong Bank, Malaysia’s sixth-largest lender, lost 0.6 per cent to RM8.15.
“While the takeover is value-enhancing to Hong Leong Bank should it have proceeded at a price-to-book of 1.4 times for EON, we are not overly perturbed over the rejection by EON,” Rachel Huang, analyst at AmResearch, said in a research note.
“Hong Leong is not without other growth options elsewhere, as it is likely to continue to build on its domestic franchise while building on its new markets in China and Vietnam,” she said. — Reuters
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