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SYDNEY - Australia's fourth-largest bank Westpac and fifth-ranked St. George said Tuesday they had agreed to a proposed merger which would create the country's biggest bank.
The plan, announced in a joint statement to the stock exchange, would form a financial services company with assets of about 550 billion dollars (US$519 billion) and market capitalization of about 66 billion dollars.
St George Bank shareholders would be offered 1.31 Westpac shares for each St George share -- a 28.5 percent premium to the stock's closing price last Friday, when they last traded.
The deal values St George Bank at 18.6 billion dollars, or 33.10 per St George share. St. George shareholders would own 28.1 percent of the combined entity.
The statement said the St George board had agreed to recommend the deal to shareholders.The combined group will have about 10 million customers and a 25 percent share of the Australian home loan market.
The two banks had signed an agreement providing for a two-week exclusivity period, during which they would undertake reciprocal due diligence, and negotiate the detailed terms of a merger implementation agreement.
Westpac said the decision by St George's board was conditional on an independent expert's report that the deal would be in the best interest of shareholders and that a superior offer did not emerge.
The merger proposal will require clearance from Australia's competition regulators.Trading in both shares was suspended ahead of the market opening on Monday but was due to resume at 11:00 a.m. (0100 GMT) Tuesday. - AFP/vm
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