MBSB among active stocks, jumps nearly 10% on RM1 bil share deal to buy out MIDF

• According to the group, the merged entity will be equipped with RM61.79 billion in assets as at end-December last year, further cementing MBSB as the second-largest stand-alone Islamic bank after Bank Islam Malaysia Bhd, which has assets of RM89.85 billion.

KUALA LUMPUR (June 12): Malaysia Building Society Bhd (MBSB) shares were actively traded on news that the bank will buy out Permodalan Nasional Bhd's (PNB) entire stake in Malaysian Industrial Development Finance (MIDF) in a RM1.01 billion share deal.

About 27.64 million shares changed hands, surging nearly eightfold from 3.58 million shares traded last Friday (June 9) — making the counter the fourth most actively traded stock on Bursa Malaysia so far in Monday’s morning session.

In comparison, its 200-day average trading volume was only about 5.46 million shares.

MBSB’s share price rose as high as six sen or 9.52% to 69 sen, compared with its closing price of 63 sen last Friday. At 10.30am, the stock was traded at 66 sen, still up three sen or 4.76%, bringing the stock a market capitalisation of RM4.73 billion.

MBSB said the RM1.01 billion purchase consideration is to be satisfied via the issuance of 1.05 billion MBSB shares — which amount to 12.78% of its enlarged share base — to PNB at an issue price of 96.52 sen per share.

In turn, PNB will emerge as a substantial shareholder of the group, while the Employee Provident Fund's (EPF) stake will be diluted to 57.45% from 65.87%.

This confirms a report in The Edge Malaysia weekly's May 8-14 edition, which cited industry sources as saying that the EPF would emerge as the single-largest shareholder of the merged entity with a stake of “between 57% and 59%”, while PNB will hold “between 12% and 15%”.

On the RM1.01 billion price tag, MBSB said it represents 0.85 times the price-to-book (P/B) ratio of MIDF’s adjusted net assets as at end-December 2022, while the issue price of 96.52 sen apiece represents a P/B ratio of 0.83 times MBSB’s adjusted net assets.

MBSB noted that this takes into account MIDF’s RM450 million cash dividend to PNB, as approved by Bank Negara Malaysia on March 31.

According to the group, the merged entity will be equipped with RM61.79 billion in assets as at end-December last year, further cementing MBSB as the second-largest stand-alone Islamic bank after Bank Islam Malaysia Bhd, which has assets of RM89.85 billion.

The deal, which is expected to be completed in the third quarter of 2023, is subject to the requisite approval of MBSB shareholders, the Securities Commission Malaysia and Bursa Securities.