Heartland has accordingly advised Avenue Hold that it will no longer be exploring the potential acquisition opportunity previously disclosed, and has discontinued due diligence and negotiations.
Heartland to acquire Challenger Bank. (Credit: Cytonn Photography on Unsplash)
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce that it has signed a conditional share purchase agreement for the purchase of Challenger Bank Limited (Challenger Bank) from Challenger Limited (ASX: CGF). The share purchase agreement is subject to obtaining the requisite regulatory approvals.
Based in Melbourne, Australia, Challenger Bank is an established authorised deposit-taking institution (ADI) which offers customers a range of savings and lending products. Challenger Bank’s products include government-guaranteed retail term deposits and home loans – its system is also capable of Reverse Mortgage origination. As at 30 June 2022, Challenger Bank had A$89 million of retail lending, A$17 million of corporate lending and A$228 million of deposits.
Subject to completion, Heartland’s existing Reverse Mortgage and Livestock businesses in Australia will be transferred to sit in or under Challenger Bank. The opportunity to grow these existing businesses in Australia either as part of a bank or a broader banking group is significant. Challenger Bank also affords further opportunities to expand Heartland’s best or only products into Australia.
For regulatory reasons, Heartland will be required to hold Challenger Bank through an Australian incorporated non-operating holding company (NOHC) which is approved and regulated by the Australian Prudential Regulatory Authority (APRA). It is anticipated that Heartland’s top-level holding company in Australia, Heartland Australia Holdings Pty Limited (HAH), would be the appropriate vehicle to apply to APRA for authority to act as a NOHC. Heartland continues to engage with the Reserve Bank of New Zealand (RBNZ) to obtain consent for HAH to also act as the NOHC of Heartland Bank Limited in New Zealand. Completion of the transaction is also conditional upon
consent under the Financial Sector (Shareholdings) Act.
The consideration payable by Heartland on completion is expected to be approximately A$36 million, subject to adjustments for net assets delivered at completion. Heartland’s intention is to cover the costs of the acquisition through existing resources.
Source: Company Press Release