Bank of Queensland has launched a A$2.46 billion (US$1.95 billion) takeover bid for rival Bendigo Bank, potentially starting a round of consolidation among Australia's regional banks.
If the transaction goes through, Bank of Queensland shareholders will hold about 60% of the combined entity.
Under the terms of the deal, Bendigo Bank shareholders would get 0.748 of Bank of Queensland shares and A$5.50 in cash.
"The merger is important for the future of banking, particularly regional banking, in Australia," Bank of Queensland Managing Director David Liddy said in a statement. "It's about recognizing the changing landscape of the Australian financial services sector, and working together to be a more effective force and an alternative for the Australian public," he added.
Bank of Queensland said a recommended offer from the Bendigo Bank board was its preferred basis for the implementation of the proposal.
The deal is expected to deliver some A$70 million in cost synergies. Competition among banks has intensified as the economy slows after fifteen straight years of economic expansion.
The banking industry is dominated by five major banks including the biggest lender National Australia Bank and Commonwealth Bank of Australia.