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BOQ completes equity raise to acquire ME Bank

The non-major bank has completed the final stage of its equity raising, with the proceeds to be used to fund the acquisition of ME Bank for $1.325 billion.

Bank of Queensland (BOQ) has announced the completion of the retail component of its underwritten one for 3.34 accelerated pro-rata non-renounceable entitlement offer (retail entitlement offer), subject to final reconciliation.

The completion of the offer represents the final stage of BOQ’s approximately $1.35 billion total equity raising, which includes the underwritten institutional entitlement offer and institutional placement (together making up the equity raising).

As announced on 22 February, the proceeds from the equity raising will be used to fund the acquisition of Members Equity Bank Ltd (ME Bank) for $1.325 billion (subject to completion adjustments).

It was announced in February that BOQ would acquire industry fund-owned ME Bank after securing a $1.3 billion equity funding package, and ME Bank’s shareholders unanimously agreed to accept an all-cash offer from BOQ.

BOQ temporarily halted trading on the ASX on 18 February ahead of the announcement “for the purposes of considering, planning and executing a proposed equity capital raising… being conducted to fund a potential acquisition”.

The target to complete the acquisition is the end of BOQ’s 2021 financial year (or at least by August, according to ME Bank), subject to regulatory approval.

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The retail entitlement offer closed on 10 March, raising around $682 million at the offer price of $7.35 per new share.

According to BOQ’s statement to the ASX, the non-major bank received strong support from its eligible retail shareholders under the retail entitlement offer.

Applications from existing eligible retail shareholders totalled around $336 million (or around 45 million new shares), representing a take-up rate of around 50 per cent.

In addition, around $72 million – or around 10 million new shares – was applied for under the oversubscription facility, with each eligible retail shareholder who subscribed under the oversubscription facility receiving the full allocation of new shares for which they applied.

BOQ added that including the oversubscription facility, the total take-up from eligible retail shareholders was around $408 million (or around 55 million new shares), representing a total take-up rate of around 60 per cent).

These numbers remain subject to final reconciliation, the non-major bank said.

“Approximately 37 million new shares not taken up under the retail entitlement offer will be allocated to the underwriters or sub-underwriters of the retail entitlement offer,” BOQ said.

“Eligible retail shareholders should confirm the actual number of new shares allocated and issued to them before trading in such shares, and the sale by any eligible retail shareholder of new shares prior to receiving their holding statement is at their own risk.”

The bank added that news shares to be issued under the retail entitlement offer will rank equally with existing BOQ shares in all respects from the date of issue.

The settlement of the approximately 92 million new shares issued as part of the retail entitlement offer is expected to occur today (16 March), with the issue of those new shares expected to occur tomorrow (17 March), and ordinary trading is expected to commence on 18 March.

Holding statements for new shares issued under the retail entitlement offer are expected to be dispatched on 18 March.

[Related: BOQ-ME Bank deal to create sixth largest bank]

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