Asia Times: Commonwealth Bank in Australia's biggest takeover bid



	March 9, 2000	atimes.com

Oceania

Commonwealth Bank in Australia's biggest takeover bid

SYDNEY - The Commonwealth Bank is expected to launch an A$8 billion (US$4.8 billion) bid for bank-assurance group Colonial Ltd, the biggest takeover in Australian corporate history.

The takeover would create a financial services giant with more than 9 million customers and A$68 billion (US$40.77 billion) of funds under management.

Both companies have refused to comment on the takeover but Colonial has asked for its shares to be suspended and confirmed it was in talks which might affect its share price, saying further details were expected on Wednesday.

The group's shares surged 82.1 cents to A$6.75 on turnover of 2.46 million on Tuesday, spurring the company to request the trading halt. The shares struck an intraday peak of $6.80 in the final hour of trade, their highest level since January 21.

In a statement to the stock exchange Colonial confirmed it was ''currently in certain negotiations which may be material to the share price, but which may not yet have reached a point where disclosure is required under the listing rules''.

Market sources told newspapers that Commonwealth and Colonial were working on a friendly merger.

One Sydney broker told AAP the Commonwealth Bank of Australia Ltd had been mentioned as sizing up Colonial. ''They're saying they'll lodge a bid before (Colonial) makes a bid for BankWest,'' said the broker, who did not wish to be named. ''So any bidder (for Colonial) will not want to see them get too strong or too big because it'll make them much harder to take over.''

Market observers believe Colonial might also be about to announce the sale of its UK assets or the purchase of a controlling stake in BankWest (the Bank of Western Australia).

One Melbourne banking analyst, who also requested anonymity, dismissed suggestions that the Commonwealth was moving on Colonial. ''It's more likely to be National Australia Bank or ANZ (Banking Group) I would have thought,'' the analyst said. ''Both these banks have historically been the two who would benefit the most from acquiring Colonial.

''ANZ need to be build scale in Australia, and it's something they said they wanted to do and they've got the surplus capital.''

Spokesmen for both ANZ and NAB also declined to indicate whether they were in the market for Colonial, saying they ''never comment on market rumors''.

Any prospective bidder would have to defeat Colonial's existing shareholder restrictions, which prevent any single holding above 10 percent. This limit expires in 2002, but can be overturned by a 75 percent vote of shareholders at a properly convened meeting.

(Asia Pulse)