National Australia Bank (NAB) announced today that it plans to buy Great Western Bancorporation, the holding company of the American Great Western Bank, for $900 million.
The US bank, based in South Dakota, has assets of more than $US3.4 billion ($3.8 billion), around 800 employees and a network of more than 100 branches across six states.
"Great Western Bank offers an ideal springboard to accelerate the organic growth strategy for our agribusiness relationship banking model into the USA," said CEO of NAB, John Stewart.
It is a strong, well-run bank with a robust history of expansion, a strong deposit base and sound financial performance."
Mr Stewart also said that Great Western Bank is active in the commercial lending, wealth management distribution and insurance agency sectors.
"These are all areas where National Australia Bank has a strong track record and we will look to continue to develop Great Western Bank's operations in these areas as well.''
Great Western Bank president and CEO Jeff Erickson said the deal will enable his bank to enhance its range of products and services.
The bank will form part of NAB's development and new business division, under the leadership of George Frazis.
The acquisition is to be effected by a NAB subsidiary merging with Great Western Bancorporation and is subject to certain conditions, including US and Australian regulatory approvals and no material adverse change.
NAB said the group's capital position would remain strong after the acquisition and that its positive earnings outlook was unchanged.
"This acquisition has a minimal impact on National Australia Bank's group financials,'' the bank said in a statement.
"It is expected to be earnings per share neutral by year three, approximately 0.5 per cent dilutive in year one and have no impact on dividend per share.''
Investors obviously weren't impressed with the deal, pushing the shares 33 cents lower in an otherwise strong market. NAB shares closed at $39.08.
