Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — Merger or Acquisition (March 2007)
19 slides from Bank Of Queensland's merger presentation, Mar 19, 2007
Slide 1: Proposal to merge Bank of Queensland and Bendigo Bank
Proposal to merge Bank of Queensland and Bendigo Bank Investor Presentation 19th March 2007 1
Slide 2: Agenda
Agenda Strategic rationale for a merger between Bank of Queensland (BOQ) and Bendigo Bank (BEN) Key terms of the proposal Benefits to BEN and BOQ shareholders from a merger Proposed strategy and operating model for the merged entity Synergy potential 2
Slide 3: Strategic rationale for a merger
Strategic rationale for a merger 9 Potential value enhancement to BOQ and BEN shareholders (driven by potential pre-tax synergies of $70 million p.a.) 9 Enhanced banking proposition for regional and community banking in Australia 9 Significantly improved distribution platform … the merged entity wil
Slide 4: Key terms of the merger proposal
Key terms of the merger proposal Scrip and cash Scrip offer on exchange ratio of 0.748 BOQ shares and $5.50 in cash per BEN share (value of proposal $17.18)(1) Exchange ratio is calculated based on 1 month VWAP trading prices for BEN and BOQ Value EPS positive impact for year ended August 2009 for b
Slide 5: The offer represents an enhanced financial proposition for BEN shareholders
The offer represents an enhanced financial proposition for BEN shareholders … 9 Value creation for BEN shareholders through premium and ongoing participation in synergies of the merged group 9 Enhanced earnings per share 9 Strong premium proposed relative to recent share price performance 9 Enhanced
Slide 6: Current BOQ shareholders benefit via
Current BOQ shareholders benefit via … 9 Development of the platform for the next phase of growth and for the merged company to become a genuine and sustainable alternative in the Australian banking landscape 9 The merger is expected to be earnings per share accretive in FY 08/09 9 Larger scale and
Slide 7: Merged group will have five unique competitive advantages
Merged group will have five unique competitive advantages Service leadership and customer satisfaction Unique business models embedding branches in local communities Local knowledge and decision making Recognised and trusted brands Customer and community driven culture 7
Slide 8: Merged group is positioned to be a clear service and community leader
Merged group is positioned to be a clear service and community leader Customer satisfaction(1) 100% Big Four 88% 79% Clear joint leadership on customer 80% 74% Customer Satisfaction (%) 69% 68% satisfaction 65% 60% Recent new advocacy research 40% confirms BOQ and BEN’s customer satisfaction lea
Slide 9: Branch network of the merged group will be larger than SGB and approaching WBC
Branch network of the merged group will be larger than SGB and approaching WBC Branch numbers(1) Big Four 1,200 The merged entity will have a 1,010 significant footprint on the eastern 1,000 seaboard Number of branches 787 781 800 634 575 Significantly more branches than 600 St George and broadl
Slide 10: The strategy for the merged company
The strategy for the merged company What is our reason for being? To be Australia’s other bank – working together to keep regional & community banking strong Vision Market leading customer experience (NPS (SM), sat.), aligning Two critical goals… with community How will we recognise Operationa
Slide 11: The strong brands will be retained and grown going forward
The strong brands will be retained and grown going forward Both brands have high levels of recognition and trust Brand message consistent with vision and strategy - Reputation for strong customer service - Recognised as contributors to local communities We will retain and build on these existi
Slide 12: A clear operating philosophy will guide organisational decisions
A clear operating philosophy will guide organisational decisions Corporate Centre ‘One factory’ Frontline Lean leadership, policy Value-adding shared Profit engines of the and compliance services company P&L accountability close to Drive operational Provide enterprise the relevant market with
Slide 13: Highlights of the integration
Highlights of the integration 9 No Community Bank branches or Owner Managed Branches will be closed and distribution footprint will continue to expand 9 Both brands will be maintained and grown 9 Continuing investment in BEN’s Community Enterprises, ensuring the ongoing sustainability of local commu
Slide 14: The synergy potential is compelling
The synergy potential is compelling We estimate synergies of c.$70 million per annum are achievable Cost synergies expected to be generated from: - IT systems - Operating expenses - Listing and regulatory costs - Funding benefits Revenue synergies will be targeted but have not been included in
Slide 15: Financing the proposal
Financing the proposal Consideration to be paid to BEN shareholders to comprise cash and BOQ shares Following the merger BEN shareholders will own approximately 40% of the merged entity BOQ will finance the merger through both equity and senior debt Equity to be raised through the issue of s
Slide 16: The proposal represents a significant premium to BEN's historical trading range
The proposal represents a significant premium to BEN’s historical trading range… BEN historical share price Premium relative to historical prices Based on BOQ’s 1 month VWAP to 16 March ($15.62) $18.00 +30.1% +25.0% +24.6% +22.6% $18.00 Proposal represents 25% premium to 1 month VWAP of $13.741 BEN
Slide 17: … and a PE multiple far above peers' trading multiples
… and a PE multiple far above peers’ trading multiples 2007F PE multiples 2008F PE multiples 22.0x Proposal represents 20.9x 2007F BEN EPS (1) 22.0x 20.0x 19.4x 20.0x Proposal represents 19.0 x 2008F BEN EPS (1) 2007F PE multiple (x) 2008F PE multiple (x) 18.0x 18.0x 17.3x 16.1x 16.0x 15.6x 15.4x 16
Slide 18: Summary
Summary Strong strategic rationale for a merger exists The offer represents an enhanced financial proposition for shareholders of Bendigo Bank and Bank of Queensland Value enhancement driven by potential pre-tax synergies of $70m per annum A merger will create the “Big small Bank” 18
Slide 19: Creating Australia's banking alternative…key statistics
Creating Australia’s banking alternative…key statistics Combined market capitalisation in excess of $4 billion1 (before value of synergies generated) More than 1.5 million customers and 575 branches Pro forma combined total assets of over $30 billion2 Pro forma combined net profit after tax
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