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development of technology and disappearance of country boundaries. since they characterize the new economy: pressure of global competition.EXECUTIVE SUMMARY Mergers and acquisitions are one of the popular topics in business today. in the Funds Management industry recently and admits that there are some limitations in the report because the merging is going on now and was hard to collect comprehensive information. The report first introduces the general conditions of merging. Based on the valuation this report will identify the benefits for Westpac acquiring BT Funds Management. Discounted Cash Flow and Comparable Multiples approaches are emphasized in the valuation of the companies. . The purpose of this thesis is to study the valuation processes and approaches in mergers and acquisitions by analyzing the Westpac Banking Corporation/BT Funds Management case.
deposit taking. the first bank in Australia. synergy. 2000 Internet: www.A. Recent examples of Mergers & Acquisitions in Australian financial institutions are National Australia Bank acquiring MLC. Sydney. which was increased to 52. In 1978. Acquirer Overview – Westpac Banking Corporation The Bank was established in 1817 as the Bank of New South Wales. leasing. the Bank made a successful bid for all the outstanding shares in AGC. In 1957. consumer finance. Westpac Institutional Bank Introduction In recent years crashing markets and a stalled economic recovery many financial institutions have been involved in merging and/or acquiring companies to increase their market value. Fund managers have been experiencing an outflow of investors rather then inflow as was the case 8 years ago. Due to this investors are more cautious and have deserted equity-weighted managed funds. Chief Financial Officer David Clarke. insurance. Also the data used is obtained from the various presentations by POF and WBC at the time of the acquisition. This paper concentrated on the Westpac Banking Corporation (WBC) acquisition of BT Funds Management from The Principle Office Group (POF). in 1995 when managed funds were the investment choice of sophisticated investors. $434 million net inflow compared dismally with the $1.1 billion figure for the March quarter last year.B. This is the reason why a lot of small and big fund mangers have been acquired by large financial institutions such as the BIG FOUR BANKS in Australia. unit trust and Superannuation fund management. 01/10/1982.Management Structure at Westpac David Morgan. Rothschild. Subsequently in 1988. payments services. a 40% interest was acquired in the major financier.westpac. Chairman Phil Coffey.8% following a three-for. foreign exchange dealing and money market services. acquisition process. Commonwealth Bank acquiring Colonial First State and Westpac Banking Corporation over BT Funds Management. Australian Guarantee Corporation Ltd (AGC). BT Financial Group Leon Davis. Some of the figures used in this report are obtained from Westpac Banking Organisation. Westpac Banking Corporation ASX Code: WBC Formerly: Bank of New South Wales. Overview of the Funds Management Industry In recent years due to poor market performance the funds management industry in Australia has largely suffered. nominee and custodian facilities.). and integration issues. The savings bank was merged with the trading bank on 01/10/1993. Group Executive. Listing Date: 31/01/1962 Head and Registered Office Level 25. services. and Hastings. NSW.2 billion that flowed into managed funds in the December 2002 quarter and the $3. general finance.com. 60 Martin Place. The discussion will incorporate aspects of the transaction such as market values.five share exchange offer.5% during 1972. . Chief Executive Officer Philip Chronican. (C. Group Executive.au Auditor: Pricewaterhouse Coopers Principal Activity The provision of financial services including lending. The Bank's Savings Bank subsidiary was formed in 1955. investment portfolio management and advice. this holding was further increased to 76.
instalment mortgage and project financing and factoring. Aust-Wide Management Ltd resigned as manager on 06/08/1992. following the merger of the Bank of New South Wales with The Commercial Bank of Australia Ltd.000 each in August 1988. operations were expanded to New Zealand. general insurance and insurance broking.au Auditors: Pricewatehouse Coopers The Commercial Bank of Australia Ltd was established in Melbourne in 1866 and by 1890 had branches in all of the mainland colonies. The Trust listed on ASX on 08/04/1993. In 1912. 2 Chiefly Square Sydney NSW 2000 Internet: www. Diversification focused on financing operations with the establishment of General Credits Ltd in 1956. since 17/10/2002 Formerly BT Office Trust (BTO) 16/10/2002 Grosvenor Trust (GTT) 07/03/1997 Listing Date:8/04/1993 Head and Registered Office Level 15. a financier engaged in the provision of leasing.Aust-Wide Management Ltd was placed in receivership in 1992.A.8%) Barclays Global Investors (5. stock unit. in order to acquire a 30% interest in Grosvenor Place. and C. Principal Activity Investment in commercial office buildings in Australia. stock unit held. the company changed its name and code to Principal Office Fund (POF).The Bank's name changed to Westpac Banking Corporation (Westpac) occurred on 01/10/1982.principalofficefund.1%) RBC Global Services Australia Nominees Pty Ltd (13.1%) National Australia Bank Limited Group (7. Substantial Shareholders JP Morgan Nominees Australia Limited (10. its operations included unit trust management. Target Overview – Principle Office Group The Trust was formed in 1988 as the Aust-Wide Grosvenor Place Trust by Aust-Wide Management Ltd. Synergistic value .50 cash for each C.5%) Queensland Investment Corporation (8.A.0%) Lend Lease Corporation Ltd (5. The Trust initially consisted of 264 units of $1M cash each and by way of a 2:1 split was changed to 528 units of $500. the Bank's savings bank activities commenced. Consequently. The Grosvenor Place interest was acquired in August 1988 for $243M. holders of $20 pref. In February 1993 unitholders voted to amend the Trust Deed so as to permit the Trust to be listed on ASX. and in 1962. An Acquisition Plan Why did WBC want to carry out plan to acquire BT Funds electronics? And is it reasonable? These questions are appearing when we think of such deal.7%) Cogent Nominees Pty Limited (5. Principle Office Fund ASX Code: POF.com. The successful merger creates value greater than the value of each company combined. stock units were offered $20 cash per pref. a manager of property trusts. $1 ord. and after Duesburys Corporate Services Pty Ltd acted as interim manager. travel and nominee services.5%) Westpac Banking Corporation (10. Heine Management Ltd was appointed manager on 30/12/1992.4%) AMP Limited (5. Through other subsidiaries. such as synergistic value and the strategic value. The following discussion elaborates some of the reasons why WBC eager to acquire the BT Funds. As for BT Funds there are at least two major reasons why BT Funds is so attractive.B.B. The merger was effected by a share exchange involving the issue of two Wales $1 shares plus $1. a listed New Zealand public company. Finance Holdings Ltd (51%).9%) Effective 17 October 2002.
The following are the main reasons according to CEO David Morgan for the acquisition of BT Funds Management. finance. No longer need two Human resource. Eg. • Strategic Value The strategic values are both advantageous for BT and WBC. • Broaden customer relationships • Improve wealth management position • Drive operational efficiency • Embed a high performance culture • Build corporate reputation After the acquisition of BT. which may be derived from putting the two businesses together. not only on the leadership position in Funds and Wealth Management Cost saving. reducing duplication operating costs when the two companies are combined. WBC is expected to become the fourth largest retail fund manager. which has lost both reputation and performance of its funds in the past two years. Write about what kind of merger it is?? . second largest wrap/master trust provider. principally from rationalising premises.PUT IN PIC FROM PG 13 BT ACQUISITION Synergistic Value Based on the benefits. For BT. WBC has been quite keen on gaining competitive advantage in the wealth and funds management business. these might related to: • The leveraging of economics of scale. and sixth largest corporate super provider. IT function and two head office.
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