BOQ / ME Bank acquisition set to challenge Big 4
Bank of Queensland jumped this week after completing the $673 million institutional component of its $1.35 billion capital raising, being used to help pay for the purchase of ME Bank it announced on Monday.
BOQ announced it has entered into an agreement to acquire 100% of Members Equity Bank for a cash consideration of $1.325 billion, creating a compelling alternative to the big banks
The transformational acquisition is strategically aligned to deliver material scale, broadly doubling the Retail bank and providing geographic diversification. The strong complementary brands have shared customer-centric cultures and differentiated customer segments and have a planned pathway to a scaled, common, cloud-based digital Retail bank technology platform.
The transaction is expected to be low double-digit to mid-teens cash EPS accretive including full run-rate synergies in the first year (FY22). It is also expected to be cash ROE accretive, including full run-rate synergies in the first year. It is anticipated annualised pre-tax synergies will be in the range of $70 - $80 million.
The acquisition to be fully funded through the $1.35 billion equity raising. Of the roughly $673 million raised, the institutional entitlement offer generated approximately $323 million at $7.35 per share. This was strongly supported by institutional shareholders with a take‐up of almost 98 per cent.
Managing Director and CEO Mr George Frazis said, “This is a defining acquisition in our ongoing transformation of BOQ, benefitting our shareholders, customers, and people. Critically, ME Bank delivers material scale, broadly doubles our Retail bank, and provides geographic diversification. The ME Bank brand is also a great fit with the BOQ and Virgin Money brands, creating customer-centric alternatives in Australia.