Australia's St. George agrees to Westpac takeover

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SYDNEY — St. George Bank Ltd., Australia's fifth-largest bank, agreed to a revised 17.3 billion Australian dollar ($14.4 billion) takeover proposal by larger rival Westpac Banking Corp. on Monday, in what would be the biggest banking acquisition in Australian history.

In a joint statement, the Sydney-based banks said the takeover was approved by Grant Samuel, an independent expert hired by St. George to analyze the bid. Samuel called the offer "fair and reasonable and in the best interests of St. George shareholders," according to the statement.

St. George's shareholders will receive an additional special dividend of 28 Australian cents per share (23 U.S. cents), worth A$160 million ($133 million) in total. Westpac is offering 1.31 of its shares for every St. George share.

"The St. George board believes that the merger of St. George and Westpac, on the terms proposed, is a very positive outcome for St. George shareholders," St. George Chairman John Curtis said in the statement.

On Aug. 13, Australia's competition watchdog, the Australian Competition and Consumer Commission, said it would not oppose the merger, saying it was unlikely to substantially lessen competition in the banking sector.

ABN Amro Morgans private client adviser Simon Ferguson said Westpac's sweetened offer for St. George should be enough to get it over the line when shareholders vote on the proposal on Nov. 13.

He said the Westpac-St. George deal helped contribute to a surge in bank stocks in Australia on Monday — along with the news of the U.S. government's bailout of troubled home lenders Fannie Mae and Freddie Mac.

St. George shares rose in trade on the Australian Securities Exchange to close 4.73 percent higher at A$31.89; Westpac was rose 5.27 percent to close at A$24.58.

Meanwhile, global ratings agency Standard & Poor's said it would keep St. George and its wholly-owned mortgage insurer St. George Insurance Australia Pty. Ltd. on credit watch positive, after reviewing the revised proposal.

"The proposed merger revisions do not affect our previous expectation that the ratings on St. George are likely to be equalized with the ratings on Westpac if the merger succeeds, as we expect St. George to become a core subsidiary of the Westpac group," Standard & Poor's credit analyst Maryanne Galea said.

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