BOQ acquires ME Bank in billion-dollar deal

The highly anticipated deal gives customers a compelling alternative to the big four

BOQ acquires ME Bank in billion-dollar deal


By Mark Rosanes

Bank of Queensland (BOQ) has announced its acquisition of ME Bank for $1.325bn, to be funded by an underwritten capital raising of $1.35bn.

The funding consists of a $1bn entitlement offer and a $350m institutional placement. The offer price for both will be $7.35 per share, representing a 9.3% discount to BOQ’s theoretical ex-rights price of $8.11 and a 12.6% discount to its closing price of $8.41 on 18 February.

Patrick Allaway, chairman of BOQ, said the highly anticipated acquisition was a major step in the bank’s strategy of becoming “the leading customer-centric alternative” to Australia’s big four.

“With the addition of the ME Bank business, BOQ now has material scale and a compelling growth platform to support this ambition,” said Allaway. “The combination of our highly complementary businesses brings together two organisations with a shared purpose and values generating greater value for customers, employees, and shareholders.”

George Frazis, chief executive officer and managing director of BOQ, described the deal as a “defining acquisition” for the bank’s ongoing transformation.

“Critically, ME Bank delivers material scale, broadly doubles our retail bank, and provides geographic diversification,” said Frazis. “It is an exciting day to see two strategically and culturally-aligned businesses come together, and we look forward to continuing to build ME Bank’s strong brand, accelerate growth and create new opportunities for our people and the group.”

The acquisition will see BOQ pay 1.05 times ME’s reported book value and 11.9 times its underlying cash earnings for the 2019-20 financial year. The $1.325bn all-cash offer also represents 1.15 times ME’s net tangible assets.

ME Bank’s shareholders, consisting of 26 industry superannuation funds, unanimously endorsed BOQ’s offer as recommended by the board.

“The board determined that the proposal from BOQ, which highly values what has been built by ME, was in the best interests of our shareholders and the transaction was unanimously supported by them,” said James Evans, chairman of ME Bank. “The combined group will be able to offer a wider network of service options, deeper resources, and the added reassurance that comes with a larger banking organisation.”

Under the terms of the deal, the ME Bank will retain its base in Melbourne, while the ME brand and operations will be maintained and grown. The acquisition is expected to be finalised before the end of BOQ’s financial year in August.

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