KUALA LUMPUR (Reuters) – Hong Kong-based private equity fund Primus Pacific Partners has filed a lawsuit in a Malaysian court to stop the country’s sixth biggest lender, Hong Leong Bank (HLBB.KL), from taking over smaller rival EON Capital (EONP.KL).
Primus Pacific, which holds 20 percent of EON Capital, took action against some board members and shareholders of EON Capital because it considered the offer unlawful and not in the best interest of the company, it said on Monday.
“We have secured a number of legal opinions that come to the conclusion that the manner in which the offer is proposed to be implemented is unlawful,” Primus Managing Director Jeroen Nieuwkoop said in the statement.
EON Capital could not immediately comment and said it would release a statement.
Hong Leong first attempted to buy out EON Capital in January when it offered 4.92 billion ringgit ($1.51 billion) but EON Capital’s board rejected the offer because it considered it too low.
Hong Leong launched a second, 5.1 billion ringgit offer after EON Capital appointed new board members.
Primus, which long opposed the deal, said it was taking legal action as the new board appointments were “actuated by a collateral purpose of helping revive and force through the offer, thus assisting certain group of shareholders realize their investment”.
In 2008, Primus paid 9.55 ringgit per EON Capital share for its 20 percent stake, well above the 7.30 ringgit Hong Leong is currently offering.
EON’s board said last month it will ask shareholders to vote in favour of Hong Leong’s offer, in defiance of independent adviser Credit Suisse, which opposed the deal.
Primus Pacific said the Malaysian high courts set a July 6 court date to hear the case.
At 0841 GMT, Hong Leong shares were up 1.5 percent and EON Capital was untraded in the broader market .KLSE that was up 1.3 percent. ($1=3.251 Malaysian Ringgit) (Reporting by Niluksi Koswanage; editing by Balazs Koranyi)