June 21 (Bloomberg) -- CIMB Group Holdings, Malaysia’s second-largest lender by assets, scrapped a plan to buy a controlling stake in Manila-based Bank of Commerce from owners led by San Miguel Corp.
The parties failed to reach an agreement after extending discussions when the sale and purchase agreements lapsed, CIMB said in a statement to the Malaysian stock exchange today.
“As such, the parties will not proceed with the proposed acquisition,” CIMB said.
CIMB agreed in May 2012 to buy 60 percent of Bank of Commerce from San Miguel and other shareholders for 12.2 billion pesos ($279 million). The transaction would have been San Miguel’s opportunity to exit a non-core business, while giving CIMB a chance to extend its reach and enter the fastest-growing economy in the region.
The Philippines’ biggest company by sales plans to keep the bank stake after “land issues” ended the deal with CIMB, San Miguel President Ramon Ang said in a mobile-phone message response to queries today. Ang said on June 11 that an agreement had been reached and that the deal would be completed in a month.
CIMB said the agreement lapsed on Dec. 9 for the San Miguel group and on Feb. 9 for other shareholders. The failed deal deprives San Miguel of funds to support its expansion in infrastructure and finance its other businesses, including Philippine Airlines Inc. and oil refiner Petron Corp.
The country’s laws restricting foreign ownership of real estate were a hurdle to the deal, the Philippine Daily Inquirer reported on May 14, citing unidentified people.
Bank of Commerce is the 17th-biggest lender in the Philippines, with assets of 92.7 billion pesos at the end of last year, according to central bank data. The Philippine economy grew 7.8 percent in the first quarter, the fastest expansion in Asia.
San Miguel shares fell 1.9 percent today before the announcement, while the Philippine benchmark stock index declined 2.3 percent. CIMB dropped 0.2 percent.
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