Public Bank Is Said to Consider Buying Late Founder’s Family Stake in LPI
(Bloomberg) -- Public Bank Bhd. said it is buying its late founder Teh Hong Piow’s family stake in the owner of Lonpac Insurance Bhd. for 1.72 billion ringgit ($400 million).
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Malaysia’s second-biggest lender by market value is paying in cash for the family’s 44.15% interest in LPI Capital Bhd., it said in a bourse filing on Thursday. The deal confirms a report from Bloomberg News on Wednesday.
Public Bank said it is buying the shares at 9.80 ringgit each from Teh’s estate and Consolidated Teh Holdings Sdn — at a 25% discount to LPI’s closing price on Tuesday.
The lender seeks to further expand its general insurance segment through the acquisition, it said in the filing. It wants to acquire the insurer as it aims to be a fully fledged universal bank, offering a variety of financial services.
“The acquisition is in line with the group’s plan to expand beyond organic growth,” Tay Ah Lek, chief executive officer of Public Bank, said at a briefing on Thursday.
The deal would trigger a buyout of the remainder of LPI, Public Bank said.
The estate of the late founder will also be making a restricted offer to sell a portion of its holdings of Public Bank’s shares progressively over a five-year period for regulatory compliance, his daughter, Teh Li Shian, said at the briefing.
Shares of Public Bank and LPI will resume trading on Friday after having been suspended in Kuala Lumpur since Wednesday.
LPI’s shares have risen about 9% this year, giving the company a market value of 5.2 billion ringgit ($1.2 billion). Public Bank has advanced 6.5% to a value of 88.7 billion ringgit.
The acquisition will provide “good incremental fee income” to Public Bank, Tay said.
Founded in 1962 as London & Pacific Insurance Co., LPI is an investment holding company. It adopted its present name in 1999 after transferring its insurance business to subsidiary Lonpac, according to its website.
Public Bank, established in 1966, has 293 branches in Malaysia and 157 overseas, and total assets of about 493 billion ringgit, its website shows. Teh died in 2022, aged 92.
--With assistance from Nurin Sofia.
(Adds detail on Teh’s estate plan to sell portion of its holdings of Public Bank’s shares in seventh paragraph.)
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