Westpac wanted to sell its Pacific businesses
In December 2020, Westpac announced that it intended to sell its Pacific business. Westpac said that this sale formed part of the strategy to simplify its operations and focus on banking in Australia and New Zealand.
Westpac had arranged to sell its 89.91% stake in Westpac Bank PNG Limited as well as its Westpac Fiji business to Kina for $420 million. The sales were subject to regulatory approval in Papua New Guinea and Fiji respectively.
Papua New Guinea wasn’t keen
Westpac said that on 22 July 2021 Papua New Guinea’s Independent Consumer and Competition Commission (ICCC) released a draft determination which outlined that it was considering denying the sale of Westpac’s stake in Westpac Bank PNG Limited.
Papua New Guinea denies Westpac sale
The Papua New Guinea ICCC has now released the final determination and it confirms that authorisation is denied for the sale of 89.91% stake of Westpac Bank PNG Limited to Kina.
Westpac said that it “acknowledges the ICCC’s determination and will continue to operate these businesses while it reviews the impact on the sale to Kina Bank”.
In Kina’s statement on the outcome it outlined the reasons why the sale was rejected. The ICCC said it was not satisfied with the acquisition because it doesn’t think it will lessen competition in the PNG market or benefit the public.
Kina said that it is assessing the implications of the ICCC’s decision not to grant authorization and is considering its options. It will update the market when there is anything further to announce.
Final thoughts on Westpac and the Kina share price
It isn’t clear from either Westpac or Kina’s announcements but there may be the ability to appeal this decision, or perhaps alter the transaction in such a way that it could be granted by the PNG ICCC. Unfortunately we will have to wait and see what happens with this, hopefully there will be further updates in the weeks or months ahead.
It has been a bit of a blow for the Kina share price, it is down over 3% at the time of writing. The last time the Kina share price was this low was December 2020.
This hasn’t materially effected the Westpac share price, as it is such a small sale when compared to the overall size of Westpac. However it does pose a logistical annoyance, as offloading its Pacific businesses is part of Westpac’s strategy to simplify.