Kathmandu, April 27: In a “strategically attractive” move, Australia and New Zealand Banking Group Ltd. (ANZ) today announced it had agreed to sell its Grindlays businesses in the Middle East and South Asia, and associated Grindlays Private Banking business, to Standard Chartered PLC for 1.34 billion US dollars (2.28 billion euros or 2.2 Australian dollars) in cash.
In addition, ANZ has received dividends of US$ 0.5 billion from Grindlays retained earning, an ANZ news release today says.
The price, excluding dividends, represents a multiple of 2.3 times book value of US$ 590 million, and 14.3 times annualised first half 2,000 earnings.
ANZ also announced today a one billion Australian dollars on-market share buyback, one of the largest buybacks by an Australian company.
ANZ chief executive officer John McFarlane, said the transaction is strategically attractive for both buyer and seller.
“For ANZ, the sale generates immediate value for our shareholders. For Standard Chartered, it creates the leading international bank in the Middle East and South Asia and it will benefit from the growth and synergies the integrated platform will bring,” he said.
ANZ will countinue to provide international banking services to its customers in the Middle East and South Asia region through a new co-operation agreement with Standard Chartered. Yhis will give ANZ customers access to a deeper and much broader network in the region. Both companies will also co-operate on project finance and corporate advisory services in the Middle East and South Asia.
In May 1999, ANZ signalled its intention to simplify its international business and focus it on Asia-Pacific.
Following the sale, ANZ will accelerate the development of its banking, financial services and e-commerce businesses in its core markets of Australia, New Zealand and Asia-pacific. In addition, ANZ will develop its established international trade, global structured finance, foreign exchange and capital markets presence in Asia, London and New York.
Discussing the buyback, Mr McFarlane said: “ANZ is committeed to efficient capital management and we do not believe in carrying excess capital for possible acquisitions, but rather justifying them to shareholders at the time they occur. While we remain open to possibilities, acquisition is not our main focus”.
Mr McFarlane paid special tribute to Grindlays’ management and staff. “The outcome and the attractiveness of Grindlays to Standard Chartered both reflect the hard work and dedication of current and former staff in the region. The new, larger business will offer our local staff expanded career opportunities,” Mr McFarlane said.
Meanwhile, according to the AFP reports received from London, ANZ said that the combination would position it as “the leading international bank in India, Pakistan and Bangladesh and second in the UAE (United Arab Emirates) and Sri Lanka, based on total assets.”
The total cost, to be established by an audit, was expected to be 1.34 billion dollars, including goodwill of 750 million dollars, Standard Chartered said.
Standard Chartered group chief executive Rana Talwar added: “This acquisition is completely in line with our stated strategy and is a significant step towards our objective of becoming the world’s leading emerging markets bank.
“It also emphasises our commitment to develop our business in the Middle East and South Asia.
“Good economic growth rates are forecast in India and across the region and we believe that this is the right time to invest … It will position us to take advantage as the region, with its rapidly growing middle class, opens up to e-commerce and new banking products.”
In an official statement, Standard Chartered said it expects the purchase to be earnings enhancing for its shareholders in the first full year after completion and after amortisation of goodwill.
Completion is expected in the third quarter of 2000, subject to regulatory approvals.