Heartland receives indicative regulatory approval to buy Challenger
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The news: Heartland Group is a step closer to acquiring Challenger Bank after receiving indicative regulatory approval from the Australian Prudential Regulatory Authority and the Reserve Bank of New Zealand.
The numbers: Heartland said that the regulatory approvals are conditional on a NZD210 million ($192 million) equity raise, by way of a NZD105 million placement, together with an NZD105 million accelerated non-renounceable entitlement offer.
The placement and entitlement offer would be at a fixed price of NZD1 per new share. Heartland shares last closed at NZD1.22.
The context: Proceeds from the equity raise will be used to finance the acquisition of Challenger, as well as supporting the expected regulatory capital requirements of both banks, and cater for near-term projected asset growth after the deal is completed.
The deal is expected to complete by 30 April, while Auckland-based Heartland said it will transfer Heartland Australia and its subsidiaries to Sydney-based Challenger on 2 May. It noted that the acquisition is a "critical step" in the banking group's expansion in the Australian market and achieving its long-term growth ambitions.
Meanwhile, Heartland's CEO Jeff Greenslade has told the board that he intends to step down at the end of the calendar year, having led the bank since its formation in 2011.
Michelle Winzer, currently chief executive banking of RACQ Bank in Queensland, has been appointed as CEO of Heartland Bank Australia.
Geoff Summerhayes will also resign from the Heartland Board and be appointed chair of the new Heartland Bank Australia board.
The sources: ASX announcement, ASX announcement, ASX announcement
