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MBSB, PNB ink exclusivity agreement for MIDF buy talks

KUALA LUMPUR (Apr 22): Malaysia Building Society Bhd (MBSB) and Permodalan Nasional Bhd (PNB) have entered into an exclusivity agreement to negotiate exclusively with each other to finalise the structure, pricing and terms and conditions for MBSB's proposed acquisition of Malaysian Industrial Development Finance Bhd (MIDF).

Under the agreement, MBSB and PNB agreed not to solicit, negotiate, or facilitate any offer or inquiry from any other party relating to the share capital, assets, businesses or undertakings of MBSB and MIDF, as well as their subsidiaries, during a six-month exclusivity period that began from the date of Bank Negara Malaysia’s approval letter for talks to begin between them, until Oct 5.

“Upon the application for the approval of BNM and/or the Minister of Finance (MoF) (via BNM) for the Proposed Transaction being made to BNM, the exclusivity period, subject to the written approval of BNM, will be extended until the date of execution of the relevant definitive agreement(s) to effect the proposed transaction.

“The exclusivity agreement shall terminate in the event the approval from BNM or MoF is not obtained for the proposed transaction or upon expiry of the period approved by BNM for the parties to negotiate,” MBSB said in a bourse filing Friday.

MIDF is a diversified financial services provider with core businesses in investment banking, asset management and development finance.

The Edge Weekly previously reported that the planned merger between MBSB and MIDF, expected to be done via a share swap, would solidify MBSB’s position as the country’s second-largest standalone Islamic bank by assets and profit after Bank Islam Malaysia Bhd.

The planned merger will put state-owned fund management giants PNB and the Employees Provident Fund on opposite sides of the negotiation table. MIDF is wholly-owned by PNB, whereas MBSB is 65.87%-owned by the EPF.

In 2019, when Al Rajhi Banking & Investment Corp (M) Bhd attempted a merger with MIDF, its proposal valued MIDF around one times its book value of RM1.7 billion, The Edge reported in November that year, citing sources.

The Al Rajhi-MIDF merger fell through because the parties could not resolve an impasse relating to the application of shariah rules in the merger.

MBSB shares finished one sen or 1.56% higher at 65 sen on Friday, giving it a market capitalization of RM4.66 billion.


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