Analyzing the Acquisition of Adelaide Bank by Bendigo Bank Ltd

This case study analyzes Bendigo Bank Ltd's acquisition of Adelaide Bank Ltd, focusing on the offer price, buy-back clause, and subsequent financial performance. The acquisition, completed in November 2007 for A$4 billion, involved Bendigo Bank gaining a controlling interest in Adelaide Bank through a share purchase plan. Post-acquisition, the merged entity, renamed Bendigo and Adelaide Bank Ltd, reported a profit gain after tax of $170.5 million in June 2008, and a gain of $17.6 million after tax through share acquisitions. The payment was structured to clear all payables to eligible noteholders by June 2012. Goodwill was added to the acquisition purchase price, and FVINA was allocated on a prorated basis. The merger led to a 10% profit increase and a 5% reduction in impairment losses, indicating that Adelaide Bank performed better post-merger. The case study references the importance of these changes and how they impacted the bank.

Running head: ACQUISITION 1
Acquisition and Mergers
Students Name
University Affiliation
Date

ACQUISITION 2
Acquisition and Mergers
Bendigo Bank Ltd decided to acquire Adelaide Bank Ltd at an offer price of $80 dollars
per Note issue with a buy-back clause of the same amount. With a buy back clause providing a
chance for Noteholders to exercise a sale for the perpetual noteholders after the transaction was
effected by the bank's board. On acquisition, the merger reported a profit gain after tax of on
June 2008 of $170.5 million. Through the acquisition of shares, the company was in a position to
report a gain of $17.6 million after tax (Johansson, 2016). The impairment losses on equity
investments of $21.1 million after-tax below the carrying value.
Method of payment
The payment for the acquisition was done through gaining a significant controlling
interest on Adelaide Bank and fostering other means of expanding the retail banking of Bendigo
Bank in order to boost its revenues. All payables for the eligible note holders were to be cleared
by 2012 June after the acquisition was effected between the two banks. The takeover had an
offer price of A$4 billion and was completed in November 2007 (Hasan, 2008). The
shareholders proposed to change the company’s name to Bendigo and Adelaide Bank Ltd after
the merger took effect in 2008. The acquisition was on 100% basis. The share purchase plan was
employed in this effect to make sure whole controlling interest on Adelaide Bank rested on
Bendigo shoulders and all decisions were made by the acquirer. The capital-based was entitled to
support the organization base for supporting business transaction all along within the stipulated
tenure.
FVINA allocation and goodwill

ACQUISITION 3
Goodwill was added to the acquisition purchase price since it is a key asset to the
organization have been in operation in retail banking for a period of more than 20years. The
FVINA was allocated on a prorated basis on the existing shareholders in an attempt to ensure all
the noteholders remained safe and pleased by the Adelaide Bank in ensuring that their
investments are safe and sound (Lie et al. 2000) Therefore, it made a lot of sense to the acquirer
since after acquisition the profit and loss account were pleasing and appealing to all the investors
who were bought by Bendigo as a result of acquisitions. After acquisition many acquisitions took
effect like Cyprus was acquired and many others and this made the Bendigo and Adelaide Bank
become the biggest bank in Australia in 2008 and up to date. Most interesting thing is the fact
that every individual wanted to transact with the bank due to its ability to meet customers' needs
and preferences in a versatile and ever-changing market. On analysis, the merger managed to a
profit rise by 10% and reduction on impairment losses by 5% (Stubbs & Cocklin, 2007).
Therefore, it means that the merger was more important and profit generating. Further analysis
shows that Adelaide Bank was worse off while it was operating alone than after the merger took
place.

ACQUISITION 4
References
Hasan, M., Ibrahim, Y., & Uddin, M. M. (2015). Institutional distance on cross-border mergers
and acquisition performance: a hypothetical framework. In Proceedings of the Asia
Pacific conference on business and social sciences, Kuala Lumpur.
Johansson, S. E., Hjelström, T., & Hellman, N. (2016). Accounting for goodwill under IFRS: A
critical analysis. Journal of International Accounting, Auditing, and Taxation, 27, 13-25.
Lie, F., Brooks, R., & Faff, R. (2000). Modeling the equity beta risk of Australian financial
sector companies. Australian economic papers, 39(3), 301-311.
Stubbs, W., & Cocklin, C. (2007). Cooperative, community‐spirited and commercial: social
sustainability at Bendigo Bank. Corporate Social Responsibility and Environmental
Management, 14(5), 251-262.