Alior Bank signs an agreement to acquire the core business of Bank BPH
On 31 March Alior Bank concluded with GE Capital group an agreement regarding the purchase of the demerged part of Bank BPH. The transaction excludes the mortgage loan portfolio (in CHF, other currencies and Polish złoty) as well as BPH TFI. The acquisition of the demerged part of Bank BPH is in line with the development strategy of Alior Bank and will be an important step in the consolidation of the banking sector.
Alior Bank will acquire shares constituting a significant stake in Bank BPH from GE Capital group. Subsequently, the Core Bank BPH, i.e. an organized part of the enterprise, excluding, inter alia, BPH TFI and the mortgage loan portfolio in CHF, will be spun-off from Bank BPH and transferred to Alior Bank. The transaction does not carry to Alior Bank any risk connected with the potential CHF mortgage conversion.
As of 30 September 2015, Tier 1 ratio of Core Bank BPH amounted to 13.25% and the estimated tangible equity was PLN 1.6bn.
The purchase price for 87.23% GE owned interest in the Core Bank BPH amounts to PLN1,225m (subject to adjustments) while 100% interest in Core Bank BPH is valued at PLN1,532m. It implies a P/TBV multiple of 0.93.
Prior to completion of the transaction Bank BPH will continue to implement its Remedy Plan. Its costs will be financed by the provisions of Bank BPH which will amount to PLN212m. Additionally, Alior Bank is protected from risks identified during the due diligence process, due to provisions amounting to PLN123m in total.
The implementation of the Remedy Plan will result in PLN160m of annual pre-tax synergies.
"Signing of the agreement to acquire the Bank BPH’s core business confirms earlier announcements that Alior Bank will actively participate in the consolidation of the banking sector. Thanks to the transaction the Bank will acquire an attractive and complementary to its business part of Bank BPH. The merger of the two banks will enable the achievement of significant synergies, as well as a further increase in efficiency", says Wojciech Sobieraj, Chief Executive Officer of Alior Bank.
The execution of the agreement is consistent with presented many times and consistently pursued by the Management Board of Alior Bank development strategy, based on a dynamic organic growth and acquisitions, coupled with achievement of the highest levels of return on equity. As a result of the transaction the combined bank will strengthen its position on the consolidating market. The number of customers will grow to 3.3 million. The deposit base of Alior Bank will increase by more than 1/3 (PLN12bn), while the portfolio of high-margin net loans by 1/4 (PLN8.5bn). Upon the merger Alior Bank assets will reach c. PLN60bn, which will place Alior Bank at 9th position in the banking sector. The experience of both banks’ employees will form a solid basis for the development of innovative products and service offering and further increase efficiency.
Alior Bank expects to benefit from pre-tax annual synergies of c. PLN300m, before including PLN160m of synergies resulting from the implementation of the Remedy Plan. The full run-rate synergies are envisaged to be achieved in 2019. One-off integration costs to deliver the planned synergies will be incurred until end of 2018, of which the majority will be incurred in 2017.
Acquisition of the Core Bank BPH will be financed by Alior Bank through an issue of new ordinary shares with pre-emptive rights for existing shareholders. PZU has committed to subscribe to its pro rata share in the offering. Enhanced capital position will allow the combined bank to maintain capitalization levels exceeding 10,75% CET1 ratio and 13,75% CAR.
The transaction is subject to fulfillment of conditions precedent, including consent of the relevant antimonopoly authority and approvals and clearances of the PFSA. Transaction closing is foreseen till the end of 2016.
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Disclaimer:
Not for release, publication or distribution, directly or indirectly, in or into the United States of America, Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.
This material is for informational purposes only and under no circumstances shall constitute an offer or invitation to make an offer, or form the basis for a decision, to invest in the securities of Alior Bank S.A. (the “Company” or “Alior Bank”). This material does not constitute marketing or advertising material within the meaning of Art. 53 of the Act on Public Offerings, the Conditions for Introducing Financial Instruments to an Organized Trading System, and Public Companies. A decision relating to the increase the share capital of the Company has not been made yet. The shareholders’ meeting of the Company the agenda of which would include a resolution on the share capital increase has not yet been convened (the “SM”). The announcement regarding the convening of the SM will include a draft resolution of the SM regarding the share capital increase of the Company. In case of the adoption by the SM of the resolution on the share capital increase by way of the issuance of new shares in the Company (the “Shares”) subject to pre-emptive rights, the Company intends to file with the Polish Financial Supervision Authority (the “PFSA”) a motion for the approval of a prospectus (the “Prospectus”) which will be the sole legally binding document containing information about the Company and the public offering of its Shares in Poland (the “Offering”). The Company will be authorized to carry out the Offering only after the SM has adopted the above-mentioned resolution and the Prospectus has been approved by the PFSA. The Company will make the Prospectus available pursuant to applicable law.
The Company’s securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States, unless registered under the Securities Act or unless an exemption from the registration requirements set forth in the Securities Act applies to them. No public offering of the securities will be made in the United States and the Company does not intend to make any such registration under the Securities Act.
This material does not constitute a recommendation within the meaning of the Regulation of the Polish Minister of Finance Regarding Information Constituting Recommendations Concerning Financial Instruments or Issuers Thereof of 19 October 2005.
In the United Kingdom, this material is being distributed only to and is directed only at “qualified investors” within the meaning of section 86 of the Financial Services and Markets Act 2000 who are (a) persons who have professional experience in matters relating to investments falling within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), (b) high net worth entities falling within Article 49(2)(a) to (d) of the Order and (c) other persons to whom it may be lawfully communicated (all such persons together being referred to as “relevant persons”). The securities will be available only to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be only with, relevant persons. Any person who is not a relevant person should not act or rely on this material or any of its contents.
This material contains certain estimates relating to the Bank BPH core business (“Core BPH”). The above estimates were prepared on the basis of preliminary financial data as of 30 September 2015 regarding the Core BPH. These data were not the subject of Alior Bank’s normal procedures regarding the closing of accounting books at the end of each period and the process of verifying the financial data (including the corrections required for the purpose of presenting financial information) in accordance with IFRS. These procedures have not been performed by Alior Bank with respect to financial data regarding the Core BPH at all.
The estimates were prepared by Alior Bank as of the date of their preparation, based on the assumption that the source data regarding the Core BPH were correct and reliable and that no circumstances had or would arise or occur which could materially affect these financial data after their provision to Alior Bank.
Neither of the above estimates nor source data regarding the Core BPH were subject of an audit, a review or any other evaluation by any external auditor in regard to the completeness and reliability of either the adopted assumptions of the specified estimates or the accounting principles that were used to prepare them.
Statements contained herein may constitute “forward-looking statements”. Forward-looking statements are generally identifiable by the use of the words “may”, “will”, “should”, “aim”, “plan”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “goal” or “target” or the negative of these words or other variations on these words or comparable terminology.
Forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause the Company’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company does not undertake publicly to update or revise any forward-looking statement that may be made herein, whether as a result of new information, future events or otherwise.
Neither the Company nor any of its subsidiaries, professional advisors or any other related entities shall be held accountable for any damages resulting from the use of this material or part thereof, or its contents or in any other manner in connection with this material.
As of 30 September 2015, Tier 1 ratio of Core Bank BPH amounted to 13.25% and the estimated tangible equity was PLN 1.6bn.
The purchase price for 87.23% GE owned interest in the Core Bank BPH amounts to PLN1,225m (subject to adjustments) while 100% interest in Core Bank BPH is valued at PLN1,532m. It implies a P/TBV multiple of 0.93.
Prior to completion of the transaction Bank BPH will continue to implement its Remedy Plan. Its costs will be financed by the provisions of Bank BPH which will amount to PLN212m. Additionally, Alior Bank is protected from risks identified during the due diligence process, due to provisions amounting to PLN123m in total.
The implementation of the Remedy Plan will result in PLN160m of annual pre-tax synergies.
"Signing of the agreement to acquire the Bank BPH’s core business confirms earlier announcements that Alior Bank will actively participate in the consolidation of the banking sector. Thanks to the transaction the Bank will acquire an attractive and complementary to its business part of Bank BPH. The merger of the two banks will enable the achievement of significant synergies, as well as a further increase in efficiency", says Wojciech Sobieraj, Chief Executive Officer of Alior Bank.
The execution of the agreement is consistent with presented many times and consistently pursued by the Management Board of Alior Bank development strategy, based on a dynamic organic growth and acquisitions, coupled with achievement of the highest levels of return on equity. As a result of the transaction the combined bank will strengthen its position on the consolidating market. The number of customers will grow to 3.3 million. The deposit base of Alior Bank will increase by more than 1/3 (PLN12bn), while the portfolio of high-margin net loans by 1/4 (PLN8.5bn). Upon the merger Alior Bank assets will reach c. PLN60bn, which will place Alior Bank at 9th position in the banking sector. The experience of both banks’ employees will form a solid basis for the development of innovative products and service offering and further increase efficiency.
Alior Bank expects to benefit from pre-tax annual synergies of c. PLN300m, before including PLN160m of synergies resulting from the implementation of the Remedy Plan. The full run-rate synergies are envisaged to be achieved in 2019. One-off integration costs to deliver the planned synergies will be incurred until end of 2018, of which the majority will be incurred in 2017.
Acquisition of the Core Bank BPH will be financed by Alior Bank through an issue of new ordinary shares with pre-emptive rights for existing shareholders. PZU has committed to subscribe to its pro rata share in the offering. Enhanced capital position will allow the combined bank to maintain capitalization levels exceeding 10,75% CET1 ratio and 13,75% CAR.
The transaction is subject to fulfillment of conditions precedent, including consent of the relevant antimonopoly authority and approvals and clearances of the PFSA. Transaction closing is foreseen till the end of 2016.
***
Disclaimer:
Not for release, publication or distribution, directly or indirectly, in or into the United States of America, Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.
This material is for informational purposes only and under no circumstances shall constitute an offer or invitation to make an offer, or form the basis for a decision, to invest in the securities of Alior Bank S.A. (the “Company” or “Alior Bank”). This material does not constitute marketing or advertising material within the meaning of Art. 53 of the Act on Public Offerings, the Conditions for Introducing Financial Instruments to an Organized Trading System, and Public Companies. A decision relating to the increase the share capital of the Company has not been made yet. The shareholders’ meeting of the Company the agenda of which would include a resolution on the share capital increase has not yet been convened (the “SM”). The announcement regarding the convening of the SM will include a draft resolution of the SM regarding the share capital increase of the Company. In case of the adoption by the SM of the resolution on the share capital increase by way of the issuance of new shares in the Company (the “Shares”) subject to pre-emptive rights, the Company intends to file with the Polish Financial Supervision Authority (the “PFSA”) a motion for the approval of a prospectus (the “Prospectus”) which will be the sole legally binding document containing information about the Company and the public offering of its Shares in Poland (the “Offering”). The Company will be authorized to carry out the Offering only after the SM has adopted the above-mentioned resolution and the Prospectus has been approved by the PFSA. The Company will make the Prospectus available pursuant to applicable law.
The Company’s securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States, unless registered under the Securities Act or unless an exemption from the registration requirements set forth in the Securities Act applies to them. No public offering of the securities will be made in the United States and the Company does not intend to make any such registration under the Securities Act.
This material does not constitute a recommendation within the meaning of the Regulation of the Polish Minister of Finance Regarding Information Constituting Recommendations Concerning Financial Instruments or Issuers Thereof of 19 October 2005.
In the United Kingdom, this material is being distributed only to and is directed only at “qualified investors” within the meaning of section 86 of the Financial Services and Markets Act 2000 who are (a) persons who have professional experience in matters relating to investments falling within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), (b) high net worth entities falling within Article 49(2)(a) to (d) of the Order and (c) other persons to whom it may be lawfully communicated (all such persons together being referred to as “relevant persons”). The securities will be available only to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be only with, relevant persons. Any person who is not a relevant person should not act or rely on this material or any of its contents.
This material contains certain estimates relating to the Bank BPH core business (“Core BPH”). The above estimates were prepared on the basis of preliminary financial data as of 30 September 2015 regarding the Core BPH. These data were not the subject of Alior Bank’s normal procedures regarding the closing of accounting books at the end of each period and the process of verifying the financial data (including the corrections required for the purpose of presenting financial information) in accordance with IFRS. These procedures have not been performed by Alior Bank with respect to financial data regarding the Core BPH at all.
The estimates were prepared by Alior Bank as of the date of their preparation, based on the assumption that the source data regarding the Core BPH were correct and reliable and that no circumstances had or would arise or occur which could materially affect these financial data after their provision to Alior Bank.
Neither of the above estimates nor source data regarding the Core BPH were subject of an audit, a review or any other evaluation by any external auditor in regard to the completeness and reliability of either the adopted assumptions of the specified estimates or the accounting principles that were used to prepare them.
Statements contained herein may constitute “forward-looking statements”. Forward-looking statements are generally identifiable by the use of the words “may”, “will”, “should”, “aim”, “plan”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “goal” or “target” or the negative of these words or other variations on these words or comparable terminology.
Forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause the Company’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company does not undertake publicly to update or revise any forward-looking statement that may be made herein, whether as a result of new information, future events or otherwise.
Neither the Company nor any of its subsidiaries, professional advisors or any other related entities shall be held accountable for any damages resulting from the use of this material or part thereof, or its contents or in any other manner in connection with this material.