Evaluation of Takeover of Adelaide by Bendigo 2018

EVALUATION OF TAKEOVER OF ADELAIDE BY
BENDIGO
September 4
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Contents
EXECUTIVE SUMMARY.................................................................................................................................2
INTRODUCTION...........................................................................................................................................3
RATIONALES BEHIND THE ACQUISITION......................................................................................................4
PERSONAL INCENTIVES FOR TAKEOVER......................................................................................................5
THE METHOD OF ACQUISITION AND REASONS FOR USE............................................................................6
REACTION OF SHAREMARKET BEFORE THE TAKEOVER...............................................................................6
ANALYSIS OF POST ACQUISITION ACCOUNTING PERFORMANCE................................................................6
TAKEOVER – VALUE ENHANCING TO SHAREHOLDERS.................................................................................6
CONCLUSION AND RECOMMENDATION.....................................................................................................6
REFERENCES................................................................................................................................................6
APPENDIX....................................................................................................................................................6
EXECUTIVE SUMMARY
As the title suggests, the analysis of the acquisition by the Bendigo Limited of the Adelaide Bank
Limited has been detailed. The main purpose of the report has been to provide the stakeholders
of the company and insight as to how the acquisition has been done and how far it has benefited
to them in terms of the value and the rewards. The report has come with the four major
conclusions. First conclusion has detailed as to why the acquisition of the Adelaide Bank has
been done. Second conclusion has detailed the evaluation of the acquisition with respect to the
method. Third conclusion has laid down the different reactions of the share market towards the
takeover and lastly the report has provided the analysis justifying the positive factor for value
enhancement towards the shareholders. In order to reach at the aforesaid conclusions, the report
has been framed and presented with appropriate headings and sub headings.
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INTRODUCTION
Finance sector is one of the major sectors across the industries operating in the different
countries. It is because without the financing no company can run its business in the easy and
smooth manner. Through this report, the acquisition of Adelaide Bank Limited by the Bendigo
Limited has been detailed. Both the companies are into the banking sector. The banking
companies are required to adhere to the norms as lay down by the Reserve bank and other
statutory authorities. The Bendigo Limited is the company which has been operating for the last
one hundred and sixty years and has been into the same sector of financing since its inception.
The company has been incorporated in the form of the Society – Bendigo Mutual Permanent
Land and Building Society in the year of 1858 with the aim of providing finance to the migrating
people to have their home and better living condition and since then the company has developed
its wings in the finance field and in the year of 1990’s, the new name has been given Bendigo
Bank Limited. Adelaide Bank Limited is also the banking company converted from the
cooperative building society. The former bank has merged with the later bank and new company
has been formed namely - Bendigo and Adelaide bank and in the current scenario, it is one of the
top largest bank in Australia.
The report will be divided into seven sections and will start with the description of the rationales
behind the acquisition. The second section will detail the personal motive of directors before the
acquisition and the third will detail as to what method the company has used for the acquisition.
The fourth section will lay down the analysis of the acquisition followed by the fifth section
detailing the reaction of the share market on the aforementioned takeover. The sixth section will
detail the analysis of the performance of the company after acquisition and last section will
provided the detail whether it has enhanced the value to the shareholders.
The report will then end up with the appropriate conclusion and references.
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RATIONALES BEHIND THE ACQUISITION
There are many rationales – economic, social as well as political which stands behind the
acquisition of Adelaide Bank by the Bendigo Bank but following are the economic rationales
which have led to the acquisition in a very easy and smooth manner:
Complementary Business
Though both the companies are in the same sector of financing, but they have the mode of their
operations and lines of businesses they operate are different but on the other hand they are so
closely related to each other that no business can work on their own they have to be used
together in order to run their businesses. Adelaide Bank Limited is the company which has the
expertise in the banking in terms of the wholesale business and provides the funds accordingly to
the needed banks and the non banking finance companies. It means to say that the Adelaide Bank
Limited is the finance provider company in the whole sale terms and have the partnerships with
the wide range of the companies involved in the distribution systems commonly known as the
distribution partners.
On the other hand the Acquirer Company – Bendigo Bank Limited is purely into the sector of the
retail banking and seeks funds from the whole sale banking companies and work under the
refinance scheme. It seeks funds not only from the wholesale companies but also from the banks.
Therefore, in this manner these two companies have the business complimentary to each other
and hence the acquisition has led them to become one of the banks in having the distribution
centers along with the retail centers.
Significant Revenue Synergies
As the business of the companies is complimentary to each other there are more bright chances
to have the synergies in the future. These synergies are in the two forms – one is of the increase
in the revenue figures for the next reporting period and the second is of the enlarged customer
base. Both of the synergies will help in the better development of the business of the company
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