BOQ to acquire CIT businesses
Bank of Queensland Limited (BOQ) said it has signed an agreement with US company CIT Group Inc to acquire Sydney-based CIT Group (Australia) Limited and CIT Group (New Zealand) Limited. The company said it would acquire the CIT ANZ vendor equipment finance business which operates in the IT and office market as well as the motorcycle and power equipment market.
BOQ expects the transaction to close in the second quarter of CY10 and as part of the transaction CIT ANZ intends to repay its outstanding fixed and floating rate notes.
The company said the acquisition represents around 15% of its equipment finance book of about $3.4 billion.
At 31 December 2009, CIT Group (Australia) had $525 million in assets and approximately 125 employees.
BOQ managing director, David Liddy, said the purchase would provide the company with access to a strategic specialised market and an ideal growth platform from which to grow new vendor relationships.
”We see significant growth in the vendor finance market and this acquisition provides an ideal growth platform for BOQ,” Mr Liddy said.
He said the business has a strong balance sheet, with margins consistent with the bank’s stated intention of growing its higher margin portfolios.
”We expect the acquisition to be earnings per share accretive immediately from completion,” Mr Liddy added.
”However, this transaction will not have a material impact on our FY10 results.”
BOQ also intends to operate CIT ANZ as a stand-alone business, which would see the current management team continue to manage the operations.
President of CIT Vendor Finance, Ron Arrington, said the decision supports CIT’s efforts to more efficiently operate its Vendor Finance business.
”The divestiture reduces our exposure to the consumer market, allows us to focus on our core commercial business, and ensures that we are aligned with strategy and market conditions,” Mr Arrington said.
At the close of trade Friday, BOQ shares were trading at $12.75.
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