Standard & Poor's has no immediate rating action on Hong Leong Bank's potential acquisition of EON Capital Bhd. S&P believes the planned acquisition will not materially affect HLB's financial profile. Based on the proposed full cash offer price of 1.4x the net book value of EON, the capitalisation of the merged entity will remain adequate despite the slight decline from goodwill generation of about US$411 million.
HLB's overall financial profile is expected to remain sound and underpinned by a prudent management strategy and sensible growth plans. The acquisition will create the fourth-largest bank in Malaysia, and provide the merged entity with an enlarged footprint to compete effectively with its larger peers. S&P expects HLB to strengthen its business profile by leveraging on EON's retail business to complement HLB's established franchise in serving small and midsize enterprises.
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