Bendigo Bank and First Australian to merge
Bendigo Bank and First Australian Building Society today announced plans to merge, creating one of Australia's strongest regional financial institutions.
The joint announcement was made by Bendigo Bank Group Managing Director Rob Hunt and First Australian Chief Executive David Jeffries.
First Australian's Board of Directors will recommend that its shareholders accept a proposal by Bendigo Bank to acquire all of its issued shares.
The merged entity would have funds under management in excess of $7 billion and 154 branches predominantly throughout regional and metropolitan Victoria and Queensland. It would be owned by 30,000 shareholders, mainly individuals, and have more than 500,000 customers.
Mr Jeffries said the shareholders would be offered one Bendigo Bank share for each two First Australian shares.
"Based on share prices at close of business on Friday, this offer represents a premium of approximately 20% for First Australian shareholders," Mr Jeffries said.
Mr Jeffries said in the current financial environment, the merger ensured a strong future for staff, members and shareholders of both First Australian and Bendigo Bank.
"The merger brings excellent synergy with no branch duplication between the Victorian-based Bendigo Bank and the Queensland-based First Australian Building Society.
"This means a secure future for the staff in First Australian's 47 branches, a strong return for First Australian's shareholders, and improved access, service and product range for First Australian's customers.
"And because Bendigo Bank is committed to rapidly growing our current business in Queensland, it means there will be no forced redundancies of First Australian staff. However, we acknowledge there will be some reshaping of the business, with staff being retrained, redeployed or offered career opportunities in the enlarged group.
"Our Board has consistently said that the Company would have to keep changing to remain competitive and this merger with a new entrant to the Queensland market provides clear benefits to all parties, including Queensland itself."
Bendigo Bank Group Managing Director Rob Hunt said the merger created exciting new opportunities for the bank, and for the staff, shareholders and customers of First Australian.
"Bendigo Bank is Australia's only regionally-based bank, and brings an entirely new range of products and services for First Australian customers," Mr Hunt said.
These include 24-hour phone and Internet banking, rural lending through our arrangements with Elders Rural Services Ltd, business banking services, funds management, superannuation products, financial planning and trustee services and the Community Bank.
"Bendigo Bank is also committed to building a major group processing division and call centre in Ipswich to service its Queensland, and Australia-wide, network of branches," Mr Hunt said.
He said First Australian customers would not notice any immediate change.
"Day one will be business as usual for First Australian. Changes will be gradually introduced over time as we reshape the business to grow and to deliver new services to customers.
"The result will be the merging of two companies with a similar market focus and business philosophy in complementary areas. The merger also provides major opportunities for communities which are looking to secure branch banking for the long term.
"Bendigo Bank has established 23 Community Banks in Victoria, NSW, Western Australia and South Australia and we know there is already demand for these locally-owned bank branches in many Queensland communities," Mr Hunt said.
Mr Hunt said First Australian shareholders would be able to share in the success of Bendigo Bank, which only last week foreshadowed a pre-tax profit rise of more than 50% this year following a 34% rise in 1998/99.
Mr Jeffries said Bendigo Bank was the perfect partner for First Australian.
"It is no secret First Australian has been looking for strategic partners, I believe we have found the perfect partner in this merger," Mr Jeffries said.
The merger will be on the basis of one Bendigo Bank share for every two First Australian Shares. This mean First Australian shareholders will own approximately 25% of the increased capital base of Bendigo Bank.
First Australian shareholders will be entitled to receive the final dividend expected to be paid by Bendigo Bank in October 2000. In addition, First Australian will pay a special dividend of 5 cents per share on approval of the merger by shareholders and members.
The Chairman and one other director of First Australian will join the Bendigo Bank Board.
Scrip-for-scrip offer based on a fixed exchange ratio of 1 Bendigo Bank ordinary share for every 2 First Australian ordinary shares, valued at $2.41 per First Australian ordinary share, based on a price of $4.82 per Bendigo Bank share as at the close of trading on 2 June 2000.
In addition, on approval of the merger by First Australian shareholders and members, First Australian ordinary shareholders will receive a special dividend of 5 cents on their First Australian shares and will also participate in Bendigo Bank's final fully franked 2000 dividend.
Offer represents a 25 per cent premium to First Australian's ordinary share price at the close of trading on June 2, 2000.
First Australian shareholders who retain their Bendigo Bank shares will benefit from the higher, fully franked dividend paid on those shares.
In the light of discussions with its taxation advisers First Australian is confident that capital gains tax rollover relief will be available to First Australian ordinary shareholders if the Scheme of Arrangement becomes effective. This allows First Australian shareholders holding their shares as capital assets to fully benefit from the value being offered while deferring any tax liability until such time as they decide to dispose of their shareholding in First Australian.
The proposal is subject to regulatory approvals, completion of satisfactory due diligence by both parties, completion of an independent expert's report concluding that the proposal is in the best interests of First Australian, and the approval of shareholders and members. All members will be asked to vote on a Scheme of Arrangement that allows the acquisition by Bendigo Bank of all First Australian's ordinary shares.
The merger will be implemented by schemes of arrangement for First Australian shareholders which will also require approval by the Supreme Court of Queensland. Meetings of shareholders and members are proposed to be held in Ipswich.
It is proposed that documentation relating to the Scheme of Arrangement will be sent to First Australian shareholders in late July 2000.