Australia’s diversified financial conglomerate Bank of Queensland (BOQ) has entered into an agreement to purchase Virgin Money (Australia) (VMA), with a strategy to expand its distribution footprint in the country.
The acquisition will boost BOQ’s reach to over 150,000 customers’ that are currently untapped, complementary product footprint and market segments, offering access to an established brand with proven capability in online customer acquisition and product distribution.
Total consideration for the deal has been valued at $40m including $30m in BOQ shares, subject to a 12-month holding lock and is believed that the transaction will complete on 30 April 2013, after satisfying all customary closing conditions.
Virgin Group will initially issue license for retail financial services for consumers and SMEs, with provisions to expand into corporate financial services.
Under the terms of the agreement, the acquirer will market BOQ-manufactured banking products under VMA brand in Australia for up to 40 years in return for an ongoing royalty.
VMA operates as a product distributor, with product manufacturing agreements with Citigroup, TAL (formerly Tower), Allianz Global Assistance, Auto & General Insurance (part of the Budget Group) and Pillar.
Based on the agreement, a Virgin Group nominee will join the BOQ Board, a joint advisory committee will be formed to drive the growth of the business and the acquirer will have the opportunity to access the Virgin Group’s global intellectual capital.
Following completion of the transaction, financial services executive Brian Bissaker will assume the post of Virgin Money Australia CEO and will oversee the VMA team from its Sydney office, while VMA will trade as a standalone business within the BOQ Group.
Virgin Group current CEO Josh Bayliss will step down from his post after acquisition, but will act as a consultant for a certain period.