BOQ and Pioneer announce merger offer


Bank of Queensland today confirmed it had made an offer for 100 per cent of Pioneer Permanent Building Society’s issued capital at a value of $4.78 per share.


The offer values Pioneer at $49.6 million and is to be implemented via a scheme of arrangement which provides Pioneer shareholders with flexible options including the payment of a fully-franked dividend and the balance in BOQ shares or cash, or a mix of their choice.


Pioneer’s Chairman Clifford Flor said Pioneer Board members, in the absence of a superior proposal, intended to vote in favour of the offer in relation to their personal shareholdings in Pioneer.


“Bank of Queensland’s offer has the unanimous support of Pioneer’s Directors in the absence of a superior proposal. It is good for our shareholders and provides improved opportunities for our customers, staff and preferred partners,” Mr Flor said.


“The share alternative offers Pioneer shareholders the opportunity to participate in a larger entity, financially and operationally, and to benefit from future synergies resulting from combining the BOQ and Pioneer businesses. It also gives our shareholders the opportunity to access a much more liquid stock.”


Bank of Queensland Chairman Neil Roberts welcomed the unanimous support of Pioneer’s Board of Directors.


“The BOQ offer provides entry for Pioneer shareholders into the country’s fastest growing bank. It is also EPS accretive for Bank of Queensland on a normalised (excluding one-off costs) basis for FY 2007 and in line with our policy to expand our physical branch presence and continue growing the Bank,” he said.


“The Bank of Queensland offer gives shareholders, staff, preferred partners and customers the very best option for their future by joining with an iconic and extremely successful Queensland financial institution with a very similar culture which focuses on superior customer service, and an active involvement in the community.”


BOQ Managing Director David Liddy said the combination of BOQ with Pioneer would create a powerful presence in one of Australia’s fastest growing regions – Central and North Queensland.


“We believe there are strong business and cultural synergies between Bank of Queensland and Pioneer Permanent Building Society,” Mr Liddy said.


“In particular, Bank of Queensland and Pioneer are focused on customer service and have a commitment to supporting their local communities. This merger will create the largest banking presence of any bank in the booming economy of Central and North Queensland.


“The offer also means Pioneer customers will have access to a more comprehensive product offering and national reach through BOQ’s branch, ATM and business banking networks,” he said.


Mr Liddy said it would be “business as usual” and Bank of Queensland and Pioneer Building Society would run as normal for up to six months while integration took place.


“We have committed to establishing BOQ’s regional head office for Central and North Queensland in Mackay. This means there could actually be an increase in staff based in Mackay’s head office as existing regional BOQ services are brought to the city,” Mr Liddy said.


Benefits to Pioneer shareholders

The Pioneer Board believes the offer provides the following benefits to Pioneer’s shareholders:

  • It represents a premium over all other offers presented to shareholders to date;
  • Potential Capital Gains Tax roll-over relief available to Pioneer shareholders who elect to receive BOQ shares rather than cash as part of the Offer consideration;
  • Total consideration has been structured to provide Pioneer shareholders with the maximum fully-franked dividends, realising surplus franking credits within Pioneer. It is expected the dividends (subject to regulatory approval) will be at least 41 cents per share, fully franked. Franking credits on a 41 cent dividend of at least 17.5 cents per share will enhance value to shareholders; and,
  • Ability to participate in BOQ shares which offer increased liquidity relative to Pioneer’s current share trading liquidity.


Merger Implementation Agreement

BOQ and Pioneer have entered into a Merger Implementation Agreement under which they have agreed to proceed with the offer by way of a scheme of arrangement between Pioneer and its shareholders which is currently expected to be completed by November 2006. The deal is subject to regulatory and court approvals, satisfactory completion of due diligence and other conditions customary for a public transaction of this nature.


Bank of Queensland

Bank of Queensland is Australia’s fastest growing regional bank with more than 200 branches throughout Queensland, NSW, Victoria, Western Australia, ACT and the Northern Territory. In the last five years it has more than doubled its branch numbers, its assets under management have more than trebled to $16 billion while its market capitalisation has grown from approximately $400 million to almost $1500 million. Bank of Queensland has won Best Regional Bank in the AB&F Banking and Finance Awards twice in the last four years and is recognised as one of the highest customer service banks in the country.


PioneerPermanent BuildingSociety

Pioneer Permanent Building Society Limited was formed in 1967 and was registered as a Building Society on 1 February 1968. It announced a preliminary pre-tax profit for year ending June 30, 2006 of $2.8 million. It has an extensive network of branches and agencies throughout Central and North Queensland. Pioneer Permanent is based in Mackay Queensland, and listed on the ASX with total assets of more than $500 million and funds on deposit of more than $450 million.



BOQ is being advised by ABN AMRO Corporate Finance as financial adviser and Minter Ellison as legal adviser. Pioneer is being advised by Jacobson Consulting Pty Ltd (corporate adviser) and Nicol Robinson Halletts (legal adviser).