Auswide Bank (MYS) M&A Announcement summary

Deal rationale and strategic fit

• Merger combines two complementary, customer-focused banks, enhancing scale, risk diversification, and geographic reach across Tasmania, Queensland, and the eastern seaboard, serving over 272,000 customers.

• Shared customer-centric culture and aligned strategies, with a focus on digital investment and operational efficiency.

• Combined entity will have $12.5b in lending assets and $9.6b in customer deposits, increasing financial resilience and funding flexibility.

• Employees to benefit from greater opportunities in a larger business.

• Increased capacity to invest in business growth, customer experience, risk management, and efficiency.

Financial terms and conditions

• Auswide shareholders to receive 1.112 MyState shares per Auswide share, resulting in 65.9% pro forma ownership for MyState shareholders.

• Scheme implementation targeted for December 2024, subject to regulatory and shareholder approvals.

• Board to comprise four non-executive directors from MyState and three from Auswide; Brett Morgan as CEO, Sandra Birkensleigh as Chair.

• Mutual break fee of $2m payable under certain circumstances.

• If Auswide’s Selfco acquisition does not close by 30 September 2024, Auswide shareholders’ pro forma ownership adjusts to 33.6%.

Synergies and expected cost savings

• Annual pre-tax cost synergies of $20m–$25m expected, equal to 13–16% of the combined FY24 cost base, with full run-rate by FY27.

• Over 50% of synergies anticipated within 18 months post-completion, mainly from governance, people, and technology.

• Main sources: technology platform consolidation, shared services integration, and third-party provider consolidation.

• Pre-tax integration costs of around $29m, mostly incurred in first two years.