Trading in Public Bank, LPI Capital to resume on Friday after acquisition announcement

Thursday 12 Dec 2024

KUALA LUMPUR (Oct 10): Trading in Public Bank Bhd (KL:PBBANK) and LPI Capital Bhd (KL:LPI) will resume on Friday, following the announcement of Public Bank’s acquisition of a 44.15% stake in the insurer for RM1.72 billion.

Public Bank, the country’s third-largest bank by assets, is acquiring the stake from the family of its late founder Tan Sri Teh Hong Piow, who also founded LPI Capital. The stake comprises a 1.41% direct interest and 42.74% held through Consolidated Teh Holdings Sdn Bhd.

Public Bank was last traded at RM4.57 on Tuesday, valuing the banking group at RM88.71 billion at that time. Meanwhile, LPI Capital shares closed at RM13, with a market capitalisation of RM5.18 billion.

The acquisition price of RM9.80 per share represents a 25% discount to LPI’s last traded price. The price tag values LPI at 1.71 times its book value and 12.41 times its 2023 earnings.

"This price was negotiated based on a willing-buyer, willing-seller basis. Additionally, money is not a factor, it's more about realigning our interests," Diona Teh Li Shian, the youngest daughter of the late founder, told the media after the signing ceremony on Thursday.

Public Bank will also be required to make a mandatory general offer (MGO) for the remaining shares it does not own, at the same price of RM9.80 per share.

Public Bank intends to maintain LPI’s listing status on Bursa Malaysia’s Main Market. The acquisition, funded through internal resources, is expected to positively impact Public Bank's earnings in the future.

The proposal is subject to the approval of Public Bank's non-interested shareholders at an upcoming extraordinary general meeting. The bank has already received approval from the Ministry of Finance and Bank Negara Malaysia.

Barring any unforeseen circumstances, the acquisition is expected to be completed by the first quarter of 2025.

Text Size