St George Bank, Australia's fifth-biggest bank has agreed to be bought by Westpac Banking after an independent expert recommended the offer that will create the nation's biggest mortgage lender.
St George's shareholders will receive an additional special dividend of 28 Australian cents per share, worth A$160 million (€92.2 million) in total, the Sydney-based banks said in a joint statement today.
Westpac is offering 1.31 of its shares for every St George share, valuing St George at A$18.2 billion (€10.5 billion) based on today's closing prices.
The takeover, the nation's largest banking acquisition, was approved by Grant Samuel, an independent expert hired by St George to assess the bid.
Samuel concluded the offer was "fair and reasonable," the banks said in the statement. The deal would leapfrog Westpac past Commonwealth Bank of Australia as the nation's largest mortgage provider.
The Australian Competition & Consumer Commission approved the bid on August 13th, saying it's "unlikely to substantially lessen competition".
Westpac Chief Executive Officer Gail Kelly's strategy of focusing on the home market contrasts with National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd, which get about a third of their income from overseas.
Commonwealth Bank Chief Executive Officer Ralph Norris in July ruled out making a counter offer to Westpac's bid.
St George shares climbed 4.7 per cent to A$31.89 at the close in Sydney. It's gained 1 per cent this year, the nation's best-performing banking stock.
Bloomberg