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1. INTRODUCTION
On behalf of the Board of Directors of CIMB Berhad (Board), Commerce International Merchant Bankers Berhad (CIMB) is pleased to announce that CIMB Berhad had, on 6 January 2004, approved and agreed on the terms of the Proposed Acquisition.


2. DETAILS OF THE PROPOSED ACQUISITION

The Proposed Acquisition would involve the acquisition by CIMB Berhad of the entire ordinary equity interest in ShareTech comprising of 40,003,120 ordinary shares of RM1.00 each from CIMB Securities Sdn Bhd (CIMBS), a wholly-owned subsidiary of CIMB Berhad, for a cash consideration of RM47.8 million.

The purchase consideration of RM47.8 million was arrived at on a willing-buyer willing-seller basis after taking into consideration, inter-alia, the cost of investment in ShareTech by CIMBS, net tangible assets (NTA) and tax losses of ShareTech as at 30 November 2003 of approximately RM47.8 million, RM31.4 million and RM44.3 million respectively.

All ShareTech shares shall be acquired by CIMB Berhad free from all claims, charges, liens, equities or encumbrances of whatsoever nature and with all rights attaching thereto and all dividends and distributions declared, paid or made in respect thereof after completion of the Proposed Acquisition.

The cash consideration of RM47.8 million for the Proposed Acquisition would be financed by an external borrowing in the form of a term loan.


3. INFORMATION ON AND BACKGROUND OF SHARETECH

ShareTech (formerly known as Labuan Securities Sdn Bhd) was incorporated in Malaysia on 7 May 1992 as a private limited company. ShareTech has an authorised share capital of RM50,000,000 comprising 49,000,000 ordinary shares of RM1.00 each and 1,000,000 non-cumulative preference shares of RM1.00 each of which as at 31 December 2003, 40,003,120 ordinary shares of RM1.00 each have been issued and fully paid-up.

The principal activity of ShareTech is trading in shares. The latest audited NTA of the ShareTech for the financial year ended 31 December 2002 is RM14,642,040.

In line with the consolidation of the stockbroking industry in year 2000, ShareTech was acquired by CIMBS to comply with the regulatory directive for a bank backed stockbroking company to merge with at least one other stockbroking company. Subsequent to the acquisition, an internal restructuring was undertaken whereby the stockbroking operations from Labuan Securities Sdn Bhd were merged with that of CIMBS and ShareTechs stockbroking license was surrendered to the regulators.


4. RATIONALE OF THE PROPOSED ACQUISITION

The Proposed Acquisition is consistent with the fact that ShareTech is no longer a regulatory necessity for CIMBS. Furthermore, the disposal of ShareTech would improve the core capital of CIMBS and increase its business capacity to cater for an expected increase in equity market volume in 2004.


5. EFFECTS OF THE PROPOSALS

5.1 Share capital and substantial shareholdings
The Proposed Acquisition will not have any effect on the issued and paid-up share capital and the substantial shareholders shareholdings in CIMB Berhad.
5.2 NTA

The Proposed Acquisition will not have any effect on the NTA or NTA per share of the CIMB Berhad group as the Proposed Acquisition is an internal re-organisation exercise.

5.3 Earnings
The Proposed Acquisition is expected to contribute positively to the future earnings of the CIMB Berhad group arising from the increased business capacity of CIMBS in view of expected increase in equity market volume.

5.4 Corporate Structure
The proforma effects of the Proposed Acquisition on the corporate structure are set out in Table 1.


6. APPROVAL AND/OR NOTIFICATION REQUIRED

The Proposed Acquisition would be subject to the approval and/or notification from the following authorities:

(i) Approval from the Foreign Investment Committee for the Proposed Acquisition;

(ii) Notification to Bank Negara Malaysia for the Proposed Acquisition; and

(iii) Notification to the Licensing Department of the Securities Commission for the Proposed Acquisition.


7. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTEREST IN THE PROPOSALS

ShareTech is a wholly-owned subsidiary of CIMBS which in turn is an indirect wholly-owned subsidiary of CIMB Berhad. The Proposed Acquisition, which is an internal re-organisation exercise, falls within the ambit of KLSEs definition of a related party transaction. However, Clause 10.02(j)(iii) of the Listing Requirements of the KLSE provides a specific exemption for a transaction between CIMB Berhad, being a listed issuer and CIMBS, being its indirect wholly-owned subsidiary. Pursuant to the above, no Directors or Substantial Shareholders are deemed interested in the Proposed Acquisition.


8. EXPECTED DATE OF COMPLETION
The Proposed Acquisition is expected to be completed by the first quarter of 2004.

This announcement is dated 6 January 2004.

To view the table/image, please refer to the attachment.

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