KUALA LUMPUR: Public Bank Bhd is buying a 44.15 per cent stake in LPI Capital Bhd from the estate of the late Tan Sri Teh Hong Piow and Consolidated Teh Holdings Sdn Bhd (ConTeh) for RM1.72 billion cash.
The acquisition is subject to approval by the non-interested shareholders of Public Bank at an extraordinary general meeting (EGM).
If approved at the EGM, Public Bank will be required to extend an unconditional mandatory takeover offer (MGO) for the remaining shares in LPI that it does not already own.
It had received approval from the Finance Ministry and Bank Negara Malaysia for the acquisition, Public Bank said at the signing ceremony of the deal today.
Public Bank expects the acquidition to be completed in the first quarter of 2025 (1Q25) and intends to maintain LPI's listing on Bursa Malaysia's Main Market.
At the signing ceremony, the Teh estate and ConTeh also announced plans to undertake a restricted offer for sale of a portion of their Public Bank shares.
This will be done progressively over five years and in compliance with the Financial Services Act.
This was announced by Diona Teh Li Shian, the late founder's youngest daughter.
She said the limited offer involves the distribution of a portion of Public Bank shares at a discounted price to all eligible staff, directors and shareholders of the banking group.
The initiative aims to ensure that Public Bank remains in the hands of those who have consistently supported its growth and success over the years, allowing it to continue building its legacy together, she added.
"My father often said that the success of Public Bank was not his alone – it is built on the trust and loyalty of its shareholders and the relentless commitment of its employees, or as he would like to call them his 'corporate family'.
"To honour his legacy and to show our deep appreciation and gratitude, we will be undertaking an exercise to distribute a portion of our Public Bank shares at a discount to all employees, directors and eligible shareholders of the group.
Athough the estate and ConTeh will streamline their interests, Li Shian reaffirmed their firm and unwavering commitment to remain as the major shareholders of Public Bank.
"This is not just a role or title for us – it is an honour and a responsibility that we deeply cherish.
"We are devoted to upholding my father's legacy and continuing the stewardship of this esteemed institution," she said.
She also expressed gratitude to Bank Negara Malaysia and the Finance Ministry of Finance for the nod to continue leading Public Bank.
The Teh family will reduce its stake in Public Bank to 10 per cent through the restricted offer for sale.
As of Feb 29, the family owned a 23.41 per cent share in the bank, with 22.77 per cent held via ConTeh, according to the bank's most recent annual report.
Further details about the restricted offer will be announced at a later date.
Meanwhile, Public Bank managing director and chief executive officer Tan Sri Dr Tay Ah Lek said the proposed acquisition will allow the group to establish an immediate market presence and a strong foothold in the general insurance segment in Malaysia.
The deal will provide a comprehensive complementary service to its current financial services and family takaful offerings.
"We are not only enhancing our portfolio, but also positioning ourselves to capitalise on new opportunities that this proposed acquisition may unlock.
"This will provide more products and services to our customers and deliver enhanced value for all our stakeholders.
"This proposed acquisition is also in line with our group's plans to expand beyond just organic growth, but through strategic acquisitions," he added.
This reflected in the group's recent acquisition of Public Bank Securities Vietnam, which enabled it to further widen its financial services offering in Vietnam and of course eventually into China.
The acquisition represents a unique opportunity for Public Bank to move towards a universal banking model that offers a comprehensive and diverse range of products and services, he added.
Tay said with Public Bank's existing network of over 260 branches across the country, LPI would be able to leverage the network to expand its distribution channels and further grow its general insurance business in Malaysia.
"In addition, we would also be able to tap into the sales and distribution network of LPI and further expand our reach to cover clients and customers of LPI.
"Aside from the mutual cross selling of products and services, Public Bank and LPI will also explore possibilities on developing new integrated products and services catering to our customers' financial and insurance needs," he added.
LPI has been in operations for over 60 years and is mainly involved in the underwriting of general insurance.
It has 21 branches throughout Malaysia, as well as branches in Singapore and operates in Cambodia through an associate company.