Bendigo and Adelaide Bank has bought the business and assets of Rural Finance Corporation of Victoria.
The purchase was formalised with the Victorian State Government earlier today, and will be for all the assets and business of Rural Finance, including its loan book, which will have an estimated value of approximately $1.695 billion at the proposed completion date of early to mid July this year.
Victorian Treasurer Michael O’Brien said the sale was expected to net a return of about $400 million, plus a 15 per cent federal government incentive payment.
Bendigo shares have been placed in a trading halt until Tuesday to allow it to carry out its $230 million share placement to institutional investors.
The company will also launch a share placement plan for ordinary shareholders following the completion of the institutional capital raising.
Bendigo shares last traded at $11.39 on Friday.
The bank will pay about $1.78 billion and has committed to maintaining Rural Finance’s brand and presence in 11 locations across Victoria.
Bendigo and Adelaide Bank Managing Director Mike Hirst said the purchase reflected the bank’s desire to grow its agri-capability and support for rural and regional customers.
“This transaction brings together two iconic Victorian businesses, both with long and proud histories of serving farmers and communities,” Hirst said.
“Rural Finance will work together with our existing specialist agricultural business, Rural Bank, to serve more than 5,200 farmers across Victoria – with a loan book in excess of $2.4 billion.”
As part of the sale the bank proposes to maintain Rural Finance’s range of community-based programs, including its young farmer finance scheme, and the administration of farmer and exceptional circumstances assistance programs on behalf of the government.
“We are confident that bringing this business under our umbrella will result in a broader and more dynamic offering to Victorian farmers, and we look forward to continuing to invest in the agricultural sector and our regional communities,” the bank said in a statement.
The acquisition is subject to APRA approval and completion is expected to occur in early to mid July 2014.
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