St. George Bank agrees to Westpac bid

SYDNEY, Australia (AP) -- St. George Bank on Tuesday agreed to a nearly 19 billion Australian dollar ($18 billion; €12 billion) takeover offer from Westpac Banking Corp. that would create Australia's biggest bank and be one of the country's largest corporate deals.

The two lenders said in a joint statement Tuesday that Westpac was offering 1.31 of its own shares for each St. George Bank share, valuing the offer at 18.6 billion Australian dollars ($17.5 billion; €11.3 billion).

The deal requires approval from competition regulators and the federal government.

The deal would create Australia's largest financial services firm in terms of market capitalization, valued at more than A$66 billion ($62 billion; €40 billion) based on Friday's closing prices.

Shares of the two companies were in a trading halt pending an announcement, with buying and selling due to resume later Tuesday.

The combined group would have some 10 million customers, a 25 percent share of Australia's home loan market and would be the nation's biggest wealth platform provider with funds under administration of A$108 billion ($102 billion; €66 billion), Westpac said.

St. George Bank's board will recommend the offer to shareholders, subject to an independent expert confirming the transaction is in their best interests, the banks' statement said.

The banks signed an agreement Tuesday for a two-week exclusivity period, during which they will undertake due diligence and negotiate the terms of a merger agreement, the banks said.

Westpac is currently Australia's third largest bank by market capitalization, and with the Commonwealth, ANZ and National Australia forms what is known as the country's "big four" banks.

For years, analysts have speculated that St. George -- Australia's fifth largest bank by market capitalization -- could be a takeover target. The group is outside the big four banks, which are prohibited from merging with one another under competition rules.

Westpac, which announced its offer for St. George on Monday, has long been considered the most likely suitor.

Treasurer Wayne Swan said on Monday the government would examine the deal but declined to comment further.

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