16th June 2023 - 2 min read
Malaysia Building Society Bhd (MBSB), the parent company of MBSB Bank, has signed a conditional share purchase agreement with Permodalan Nasional Berhad (PNB) to acquire Malaysian Industrial Development Finance (MIDF) for RM1.01 billion.
To pay for the deal, MBSB will issue 1.05 billion new MBSB shares at an issue price of RM0.9652 to PNB. Accordingly, this will give PNB a 12.78% stake in MBSB. Meanwhile, MBSB’s other stakeholder, the Employees Provident Fund (EPF), will see its stake diluted from the existing 65.87% to 57.45%.
Once the deal is through, MIDF will become a wholly-owned subsidiary of MBSB, resulting in the establishment of an enlarged banking group that can service a wider customer base that extends beyond MBSB Bank’s and MIDF’s existing pool of customers.
The expanded network and complementary businesses from the enlarged group will also put it in a position to build a more diversified and sustainable businesses with profitable growth moving forward. Among other segments, MBSB will offer tailored services in consumer banking, commercial and SME banking, development finance, corporate banking, as well as investment banking and asset management.
“The potential synergies between MBSB Bank and MIDF would enable the enlarged group to serve a wider group of customers through tailored financing, structuring, and advisory solutions. Our combined strength and expertise put us in a better position to support the business needs and growth of consumer and corporate clients,” said the group chief executive officer of MBSB, Datuk Nor Azam bin M. Taib.
MBSB further said that it looks forward to a transformational change under the stewardship of an experienced management team. It expects to table the proposed acquisition for shareholders’ consideration by August 2023.
For context, MIDF had also previously been pursued by Al Rajhi Bank for a merger with the latter’s subsidiary, Al Rajhi Banking & Investment Corp (M) Bhd – back in 2019. However, the proposal fell through in 2020 after both parties were unable to overcome disagreements over the shariah law that should be implemented (either Malaysian or Saudi shariah law).
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