Westpac Banking has agreed to buy St George Bank for A$18.6 billion ($17.6 billion) to create Australia's second-biggest bank and largest provider of home loans.
St. George will recommend shareholders accept the offer of 1.31 Westpac shares for each of its shares, the Sydney-based banks said in a joint statement today. The deal values St. George at A$33.10 a share, 24 per cent above its closing price on May 9th.
Westpac Chief Executive Officer Gail Kelly, recruited from St George in August, is attempting Australia's biggest banking takeover to leapfrog Commonwealth Bank of Australia in the $165 billion home loan market. Since her appointment, Westpac stock is the best performer among the nation's banks, while St. George is the worst.
St George shares jumped 28 per cent to A$33.99 in Sydney. Westpac fell 0.6 per cent to A$25.85.
The 50-stock S&P/ASX 200 Finance Index rose to a three-month high on optimism the offer may spur more acquisitions.
All Westpac and St George brands will be retained as part of the deal, creating a company with 10 million customers and about A$500 billion of assets. The combined company would control 25 per cent of Australia's home loans market.
At current prices the deal would be the biggest between two Australian-based companies.
Bloomberg