CIMB; Hold; RM8.20
Price Target: RM8.70; CIMB MK

CIMB is not proceeding with its plan to acquire the 60% stake in Bank of Commerce, Philippines. CIMB announced to Bursa Malaysia that the parties to the sale and purchase agreements (SPAs) have been engaged in negotiations since the lapse of the SPAs, but have not been able to reach an agreement on the new terms.

We understand that Philippines’ laws restricting foreign ownership of real estate were a stumbling block to the deal. Recap that in May 2012, CIMB announced that it plans to buy 60% stake in Bank of Commerce Philippines for PHP12.2bn (or RM881m) from San Miguel. The transaction would allow San Miguel to exit its non-core business, while giving CIMB the opportunity to tap the Philippines market and to extend its reach in ASEAN. The proposed acquisition would have minimum impact to CIMB Group and we have not included the financial impact in our forecasts. Maintain Hold on CIMB Group and RM8.70 TP.

Source: HwangDBS Research - 24 Jun 2013