Home Building Society will merge with StateWest Credit Society, pending shareholder, member and regulator approval, to create an organisation with more than 110,000 customers and total customer funds under management of $3.5 billion.
Under the deal announced this week, Australian Stock Exchange-listed Home Building Society will acquire StateWest Credit Society and associated entities through the issue of 15.17 million shares to StateWest members. The agreement is based on a $120 million valuation of StateWest.
Home Building Society chairman Tony Howarth said the company had been looking at StateWest for a “long while”, but only initiated proceedings about five weeks ago.
“It is a win-win situation and we are throwing down a challenge to banks,” he said.
“It is a merger of equals. It is about providing a local alternative to big banks and creating a new force within the WA finance services group.”
Advantages of the merger, according to StateWest chief executive Greg Wall, include an expanded range of products (personal loans, credit cards, car loans and full mortgage range), a bigger branch network, a larger customer base, and consolidated systems and premises.
If the merger is approved, the new organisation (with branding strategy and merged entity name still to come) will be the state’s largest listed financial services group and with the potential to enter the ASX200 Index of Australia’s largest listed companies.
Home Building Society managing director Craig Coleman said the combined entity also intended to apply for a banking licence.
Mr Howarth will be chairman of the new merged entity, Mr Wall the managing director, while Mr Coleman will become a non-executive director, and StateWest chairman Trevor Halliday will be a non-executive director and deputy chairman.
Although both companies say no branch or call centre staff will face involuntary redundancy, branch closures are expected because of “double-ups” (a Home and State office) in several suburbs. Among these suburbs are Cannington, Fremantle, Joondalup, Mandurah, Midland, Morley and Perth.
If all goes according to plan the merger should be completed by January 2006.
Home Building Society shares closed on Tuesday up 45 cents to $9.
The news of the planned Home and StateWest merger was followed by a report that Adelaide-based credit union, Australian Central Credit Union, is considering expanding by acquisition in the WA market in the next few months.
