SYDNEY Australia's Bendigo and Adelaide Bank Ltd (BEN.AX) said on Monday it plans to buy state-owned Rural Finance Corporation of Victoria for A$1.78 billion ($1.65 billion), continuing its push to grow its business by swallowing up smaller rivals.
The acquisition is one of the biggest for regional lender Bendigo since its $4 billion acquisition of Adelaide Bank in 2007. Rural Finance Corp is also headquartered in Bendigo, the fourth-largest city in Australia's second most populous state Victoria.
Bendigo has said it plans to grow its overall market share to 10 percent from 3 percent by buying smaller regional lenders. The acquisition, which was formalized by the Victorian state government on Monday, would almost quadruple its rural loan book to more than A$2.4 billion, Bendigo said.
The sale comes as Australia's governments look to sell off some A$130 billion of state-owned assets to fund a pipeline of infrastructure projects and project upgrades.
Federal Treasurer Joe Hockey has promised state governments financial incentives to sell assets, as well as pressing ahead with his own plans to sell a range of federal government-owned assets such as health insurer Medibank Private.
Bendigo said it will undertake a A$230 million share placement to institutional investors, as well as sell new shares in a separate public offer to finance the acquisition. Its shares were placed in a trading halt on Monday.
(Reporting by Byron Kaye; Editing by Kenneth Maxwell and Christopher Cushing)