Magazine article American Banker

Australia & New Zealand Group to Acquire Grindlays Holdings; Melbourne Firm to Pay $250 Million for London Company

Magazine article American Banker

Australia & New Zealand Group to Acquire Grindlays Holdings; Melbourne Firm to Pay $250 Million for London Company

Article excerpt

Australia & New Zealand Banking Group Ltd. of Melbourne has agreed to acquire Grindlays Holdings PLC of London for 182 million pounds sterling, which is equivalent to about $248.9 million at recent exchange rates.

The announcement of the acquisition ends years of speculation about the future of Grindlays, which had serious earnings problems in the mid-1970s.

Grindlays' two major shareholders, Citibank and Lloyds Bank of London, have said that they will vote their shares in favor of the acquisistion. Citibank owns 48.6% of grindlays, and Lloyds controls 21.3%.

Grindlays Holdings' principal bank affiliate is Grindlays Bank PLC, the 11th largest bank in the United Kingdom.

Citibank recently announced that it had completed negotiations with Grindlays Holdings in connection with the acquisition of the insurance subsidiary of Grindlay Brandts Insurance Brokers Ltd., a wholly owned subsidiary of Grindlays.

From 1976 to 1981, Citibank had a management-support contract with Grindlays in an attempt to nurse the British bank back to health.

In 1974 and 19758 Grindlays lost the equivalent of $32.5 million on problem real estate loans and troubles at its merchant banking subsidiary. Subsequently, Citibank came to Grindlay's aid by increasing its stake in the bank and signing the management contract. Lloyds provides Grindlays with a loan.

After the capital injections, Grindlays returned to profitability. In recent years, however, earnings have been flat. In 1983, earnings declined to $39 million from $55 million.

The acquisition, which is expected to be completed in September, has been approved by the Bank of England and the Reserve Bank of Australia.

To raise cash for the takeover, Australia & New Zealand said it plans a new rights offering totaling 225 million Australian dollars, equivalent to $201.2 million.

Australia & New Zealand, which has $20.7 billion in assets, is Australia's third largest banking company. Grindlays has $7.4 billion in assets.

PSFS of Philadelphia, the nation's largest savings bank, has agreed to acquire Shorewood Corp., a real estate development firm based in Noblesville, Ind.

Under the terms of the transaction, PSFS, which was formely known as the Philadelphia Saving Fund Society, will pay $24 in cash for each share of shorewood, or a total of $15.1 million.

In addition, shareholders of Shorewood will receive all the shares of Marina Corp., currently a subsidiary of Shorewood, which will hold about 1,350 acres of undeveloped land and will operate marinas.

M. Todd Cooke, chairman of PSFS, said the Shorewood properties comprise more than 1,000 acres in three lakeshore developments in Indiana.

PSFS has $12.3 billion in assets. Shorewood had revenues last year of $9. …

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