Jan. 6 (Bloomberg) -- Malayan Banking Bhd., Malaysia’s biggest lender by assets, is planning a 4.2 billion ringgit ($1.4 billion) general offer for Kim Eng Holdings Ltd., a Singapore securities broker, said a person familiar with the matter who couldn’t be identified as the information was
confidential.
    Both Malayan Banking, or Maybank, and Kim Eng’s shares were suspended today pending an announcement. Kim Eng said in a Singapore exchange filing on Dec. 17 that it had been approached by unidentified parties that may be interested in buying its shares that may lead to a general offer.
    Celina May Benjamin, a Maybank spokeswoman, was not immediately available for comment when phoned by Bloomberg.

KUALA LUMPUR (Dow Jones)--Malaysia''s biggest lender by assets, Malayan Banking Bhd. (1155.KU), is buying a 45% stake in Kim Eng Holdings Ltd. (K50.SG) for S$3.10 a share, valuing the Singapore brokerage firm at US$1.4 billion, people familiar with the deal said Thursday.

"Maybank will also undertake a general offer to buy the remaining shares," a banker familiar with the deal told Dow Jones Newswires, asking not to be identified.

Maybank is buying a 28% stake from Taiwan''s Yuanta Financial Holding Co. Ltd. (2885.TW) and an additional 17% stake from Singapore investors, people familiar with the deal said.

Maybank''s purchase of the 28% stake in Kim Eng values the target company at 1.9 times book value or MYR4.20 billion ($1.37 billion), the first person said.

SINGAPORE : Malaysia's biggest bank, Maybank, is acquiring Singapore brokerage Kim Eng in a deal worth S$1.8 billion.

Analysts said the price is on the higher side, but Kim Eng's strong regional presence is worth the extra investment.

Kim Eng will now also stand to benefit from being a bank-backed brokerage, with access to cheaper funding and more clients.

When CIMB bought GK Goh Stockbrokers in 2005, the deal gave the Malaysian bank a key footprint in regional markets like Indonesia and Thailand.

Now Maybank is following in its rival's footsteps.

And the move is said to benefit both sides.

Albert Fong, president of Singapore Remisiers said: "Currently it is very well established at home as a commercial bank (but) the stock-broking outfit is not so well established like Kim Eng. Kim Eng with Maybank, it will become a bank-backed securities outfit. That combines well for both. With the strong branding and the reputations of both entities, it will enhance the business opportunity for future expansion."

Under the deal, Maybank is going to acquire a 44.6 per cent stake in Kim Eng at S$3.10 a share - a 15 per cent premium to its closing price on Wednesday - from Ronald Ooi and Yuanta Securities Asia Financial Services.

It will then make a mandatory offer to minority shareholders for all remaining shares and privatise the company.

This will value Kim Eng at S$1.8 billion.

The acquisition price represents a multiple of 1.9 times Kim Eng's book value, which is slightly higher than the average of 1.4 times for such deals.

Analysts said, while expensive, the deal will still give Maybank a regional footprint in one fell swoop. It will be cheaper than Maybank growing its brokerage operations market-by-market across the region.

As the second Malaysian bank to make a foray into Singapore's brokerage sector, analysts said Maybank is tapping Singapore's position as a financial capital of ASEAN.

"ASEAN is sort of like the forgotten story of Asia. I think people are sitting up and realising that you have a huge consumer base here - you've got economies that are increasingly integrating and you've got economic value to be extracted from that. So that fits that theme very well," said Trevor Kalcic, head of Southeast Asian Equity Research at RBS.

Since the financial crisis, brokerages have had a higher cost of borrowing.

Analysts said recourse to Maybank's retail deposits will lower that cost and also give Kim Eng access to the bank's corporate clients to develop its investment banking business.