Bank of Queensland Limited (ASX: BOQ) has received approval for its acquisition of ME Bank.
What did BOQ announce today about the ME Bank acquisition?
The regional bank announced today that the Treasurer of Australia has provided approval.
Four months ago, the bank announced it had entered into an agreement to acquire the entire ME Bank business for a total cash consideration of $1.325 billion payable at completion. This deal was subject to regulatory approval from the Treasurer. That approval was the only condition needed to complete the transaction.
Completion is now expected to take place on 1 July 2021.
Leadership comments
BOQ Group Chair Patrick Allaway said: “The acquisition of ME Bank is a key step in our strategy to be a compelling alternative to the big banks. It is a defining moment in the transformation of BOQ Group, which will benefit our shareholders, customers and people.”
BOQ Group Managing Director and CEO Mr George Frazis said: “The addition of ME Bank to the BOQ Group will further strengthen our multi-brand strategy, deliver material scale, broadly double the size of our retail bank, and provide us with geographic diversification. We look forward to the ME Bank team formally joining the BOQ Group very soon.”
How will this affect the financials?
Prior to completion, BOQ and Me Bank will continue to operate as separate businesses with no immediate changes expected for customers of either business.
On the basis that completion occurs on 1 July 2021, BOQ’s FY21 financial results will incorporate earnings from ME Bank for the period 1 July 2021 to 31 August 2021.
The current market guidance communicated with the FY21 first half financial results excluding the impact of these earnings.
Summary thoughts on BOQ and the share price
BOQ shares are down this morning, like most of the market. I think it’s doing the right thing by expanding with this acquisition. Scale certainly helps in the banking sector.
But I’m generally not a huge fan of banks for dividends – they are usually slow growers and can suffer significantly during recessions.
There might be other ASX dividend shares that could be solid income options.
