Westpac beats Pepper, Macquarie, in $1.45 billion takeover

by AB14 Oct 2013

Westpac has succeeded in its bid to take over select Lloyds Banking Group businesses, including Capital Finance Australia (CFAL) and BOS International Australia, for a total sum of $1.45 billion.

The acquisitions include a motor vehicle finance book of $3.9 billion and equipment finance book of $2.9 billion, as well as a corporate loan portfolio of $1.6 billion.

Westpac CEO, Gail Kelly, says the acquisition will deliver benefits to shareholders and is a good strategic fit with the existing businesses of St.George and Westpac Institutional Bank.

“This is a value creating, straightforward transaction that makes both commercial and strategic sense. These are strongly performing businesses that we know well and that will expand our reach and capability in target segments,” says Kelly.

“Importantly, the transaction meets our strict acquisition criteria and shareholders will see a benefit to earnings per share in FY14. Our strong capital position has allowed us to expand our business without having to raise additional equity.”

The transaction is expected to deliver approximately $100 million in additional cash earnings by financial year 2015, as well as dramatically expand Westpac Groups’ reach within the equipment finance sector.

CFAL’s motor vehicle finance and equipment finance business has total receivables of $6.8 billion across 213,000 consumer and commercial customers.

Westpac believes the motor vehicle finance business will complement St.George’s existing motor vehicle finance business, given CFAL’s business features regional and rural Australia, while St.George’s business is focused on metropolitan areas. As a result, the acquisition will expand the group’s traditional footprint.

As reported by Australian Broker earlier this month, Westpac was initially bidding against Pepper and Macquarie Group in its effort to acquire the Lloyds assets.