Bank of Queensland’s share price rallied strongly on Tuesday after institutional investors swung behind the planned A$1.32 billion buyout of ME Bank.
BoQ’s share price closed up 80 cents or 9.5 per cent to $9.21 – its highest level since October 2019.
In an ASX filing the bank revealed that it had raised $673 from institutional investors through an entitlement offer and a placement that were each priced at $7.35 per share.
Support for the raising among existing institutional investors was overwhelming, with 98 per cent taking up scrip via the entitlement offer.
“We are very pleased with the strong support we have received from our institutional shareholders and other investors as we take this unique opportunity to create a leading customer-centric alternative to the big banks,” said managing director, George Frazis.
“ We believe that this transformational merger creates a compelling proposition with significant scale benefits through the alignment of operating models and our technology roadmaps.”
Proceeds from the institutional raisings equate to almost half the cash required to complete the ME purchase, with BoQ relying on a discounted entitlement offer pitched at retail investors for the rest of the money.
The retail offer, which is underwritten by Goldman Sachs and UBS, will open for subscriptions on 1 March and close nine days later.
Retail shareholders are eligible to subscribe for one new share for every 3.34 shares they currently hold at the discounted price of $7.35.
The equity raising is expected to be completed on 18 March.
An interesting feature of the negotiations between the BoQ and ME boards last week was the decision to consult with officials from the Finance Sector Union before the transaction was announced to the market.
In a disclosure on its website on Monday the FSU confirmed its participation in the process after senior officials gave undertakings to both banks that the deliberations would remain confidential.
In a notification sent to union members on Monday, the FSU indicated it had secured initial commitments from BoQ in relation to staff employed at ME’s Melbourne headquarters.
“Your union has worked with ME and BoQ in a collaborative way leading up to this announcement to protect your rights in this process,” the union told ME members in the update.
“We feel confident about the early commitments BoQ have made.
“BoQ have also indicated that the ME brand, operations, and Melbourne based operations will be retained.”