St George Bank’s shares rallied after speculation mounted that National Australia Bank (NAB) or Commonwealth Bank of Australia (CBA) may make a bid for the company.
Sydney-based St George jumped 85 cents or 2.6 per cent to close at $34.22 in trading yesterday, above Westpac Bank’s $33.10 per share proposal on May 13.
Speculation gathered after NAB chief executive John Stewart said the company he led was looking to buy good quality assets amid the global credit crunch and would not rule out a bid for St George.
“Of course we are not ruling anything out; it is a very interesting time,” Stewart said on ABC TV.
St George and Westpac were locked in two weeks of exclusive talks, which NAB would be watching closely, he said.
“We are watching [the talks] with interest to see what happens,” Stewart said.
“There is nothing we can do during the two weeks apart from speculate.”
St George agreed to an $18.6 billion merger proposal by Westpac.
Together they would have a pro forma market capitalisation of $66 billion and 1124 planners with 648 practices, according to data from the latest IFA Dealer Group Survey.
CBA could also be a likely candidate because it did not want to lose its share of the home loan market, Lincoln Indicators analyst Elio D’Amato told InvestorDaily.
“[The merger] is a pretty aggressive play by Westpac to attract retail business,” D’Amato said.
“The questions are how will CBA react, and whether ASIC allows the transaction.”
He said ASIC might not be happy with any merger, in which case, St George could still be acquired by another bank as long as its assets were carved up and divested to even out competition.
Spokespeople from NAB and CBA declined to comment further.
