The Australian bank Westpac has agreed to acquire Lloyds Banking Group’s Australian asset finance business CFAL and its corporate loan portfolio BOSI for $1.45bn.
The deal comprises motor vehicle finance book of $3.9bn, equipment finance book of $2.9bn and a corporate loan portfolio of $1.6bn.
The sale is part of Lloyds’ plan to cut costs, reduce international network and focus on its UK business. The purchase price includes about $1.19bn of net tangible assets and $260m in goodwill.
Gail Kelly, CEO of Westpac Group, said the acquisition would deliver benefits to shareholders and was a good strategic fit with the existing businesses of St.George and Westpac Institutional Bank (WIB).
Kelly added: “These are strongly performing businesses that we know well and that will expand our reach and capability in target segments. Importantly the transaction meets our strict acquisition criteria and shareholders will see a benefit to earnings per share in FY14.”
The transaction is expected to deliver about $100m in additional cash earnings by financial year 2015. It will expand Westpac’s capability and reach within equipment finance, build scale and geographic diversity within its motor vehicle finance business, apart from extending customer relationships.
CFAL’s motor vehicle finance and equipment finance business has total receivables of $6.8bn across 213,000 consumer and commercial customers.
As an operating lease specialist, the acquisition of CFAL will allow WIB to offer a more comprehensive suite of leasing solutions to customers.
Meanwhile, Westpac has informed details of the transaction to the Australian Competition and Consumer Commission.
The acquisition, which is expected to be completed by the end of this year, will be funded from internal resources and is estimated to have a 38 basis point impact on Westpac’s common equity tier 1 ratio.