ANZ paid $4.9 billion for essentially the Queensland banking operations of Suncorp.
On Monday, Queensland regional bank Auswide (ASX:ABA) and Tasmania’s MyState (ASX:MYS) unveiled what could only be called a “mergerette,” with a value for the all-paper deal around 80% less than the ANZ buy at approximately $755 million.
The value of the merger is 105% of the current market value of Bendigo and Adelaide Bank at $7.03 billion.
MyState Bank has reported $8.4 billion in assets and is larger than Auswide, with around $6 billion in assets. MyState also operates TPT Wealth, a trustee and wealth management company, which will see it dominate the merged company.
Auswide shareholders will receive 1.112 New MyState shares per Auswide share, implying 65.9% pro forma ownership of the combined group by existing MyState shareholders.
The two banks expect the merger will add to earnings from 2026 and will offer much-needed scale and efficiency benefits. The merger is targeted for completion by the end of 2024, with regulatory and shareholder approvals required. Both have been scouting for suitable merger partners for years, and even combined will still be a mini-mini-major player.
In late 2011, Tasmania-based MyState acquired the struggling Rockhampton-based financier The Rock.
MyState Limited reported a profitable FY24 with a net profit after tax of $35.3 million (down 8.3%), a steady dividend payout of 11.5 cents for the final and 23 cents for the year to June. Lending grew 2% to $8.0 billion for the year, alongside a significant increase in new customers and the successful launch of new banking services.
MyState said it expects significant pre-tax cost synergies of between $20 million and $25 million and the merger is expected to be EPS accretive for MyState shareholders, including full run-rate synergies from FY26.
“MyState expects that operational integration will largely be achieved by the end of FY27 at which point the business will have realised the ongoing benefits of the merger.
“The main sources of synergies are expected to include the consolidation of technology platforms, the integration of shared services, a refined leadership and management structure, and consolidation of third-party providers.
“FY25 earnings will be impacted by upfront transaction and integration costs,” MyState warned.
An estimated $7 million in savings will come from rationalising the two banks’ IT systems – that always carries with it concerns – just look at the difficulties Bank of Queensland has had with integrating Members Equity.
