Questions about Westpac and St George merger

[GundamZeta]

I have a question on the merge....

the merge deal is 1 SGB will have 1.31 new Westpac shares...

therefore will the NEW westpac share price increase since it will affecting the combine total assets of two different?

e.g. SGB now is 26 and Westpac is 20.. will the new price of westpac become 26+20 someting like that? of course i know it's not that simple maths by adding two up... but i wanna to know the approx price of a new westpac share... (assume the market does not have any further bad news)

second question is, the St Geog Div will have DRP before merge? and what is the DRP value (value base on what day?)

thx

 

[Nyden]

Re: Westpac & St Geog Merge & Questions

The share price won't increase at all - unless it increases because of other factors. Westpac will be issuing all these shares to St George holders; and therefore the total number of shares out there will have vastly increased; thus diluting the value of the shares ... whilst adding to the value behind them.

Imagine this; you have a piece of paper that says you're entitled to 10% of a pizza. There are 10 more pieces of paper each with the same entitlement. Now - let's say we want some garlic bread (St George) in there; what we'll do is offer up 30% of our pizza to the owners of said garlic bread. In order to do this; we have to create another 5 pieces of paper - each with equal shares of the pizza ... this means there are now 15 pieces of paper each holding 6.66% of a pizza - instead of 10 holding 10%, does this make sense?

Granted, our pieces of paper now give us 6.66% of a garlic bread as well; but it's still a lesser holding.

 

[Junior]

Re: Westpac & St Geog Merge & Questions

It just means if you are a holder of St George shares you will receive 1.31 Westpac shares for every SGB share you hold...i.e. if you have 100 shares in SGB you will receive 131 WBC shares. This doesn't mean there will be an instant increase in the value of WBC shares... it means that Westpac will issue new units to SGB shareholders. So there will be an instant increase in the volume of WBC shares in existence.

Edit: Nyden's explanation is far more interesting than mine.

 

[GundamZeta]

Re: Westpac & St Geog Merge & Questions

The share price won't increase at all - unless it increases because of other factors. Westpac will be issuing all these shares to St George holders; and therefore the total number of shares out there will have vastly increased; thus diluting the value of the shares ... whilst adding to the value behind them.

Imagine this; you have a piece of paper that says you're entitled to 10% of a pizza. There are 10 more pieces of paper each with the same entitlement. Now - let's say we want some garlic bread (St George) in there; what we'll do is offer up 30% of our pizza to the owners of said garlic bread. In order to do this; we have to create another 5 pieces of paper - each with equal shares of the pizza ... this means there are now 15 pieces of paper each holding 6.66% of a pizza - instead of 10 holding 10%, does this make sense?

Granted, our pieces of paper now give us 6.66% of a garlic bread as well; but it's still a lesser holding.

ok i c.. i understand... i forgot the fact that adding more Shareholders in for the piece of big cake...by the way, what about the DRP issue? do u have any idea of it?

 

[Nyden]

Re: Westpac & St Geog Merge & Questions

ok i c.. i understand... i forgot the fact that adding more Shareholders in for the piece of big cake...by the way, what about the DRP issue? do u have any idea of it?

I know very little about both companies I'm afraid; so I can't really help there.

I am craving pizza now though
... cake sounds good as well, especially big cake.

 

[skc]

Re: Westpac & St Geog Merge & Questions

Imagine this; you have a piece of paper that says you're entitled to 10% of a pizza. There are 10 more pieces of paper each with the same entitlement. Now - let's say we want some garlic bread (St George) in there;

LOL...Gail Kelly used to bake garlic breads only but now she's the head chef of a pizza parlour.

ok i c.. i understand... i forgot the fact that adding more Shareholders in for the piece of big cake...by the way, what about the DRP issue? do u have any idea of it?

For the DRP issue, go to asx.com.au and see the ex-div date, the div amount and whether DRP is in force. To see specs of DRP, go through ASX announcement or St George's website to see how the price is calculated previously. For example, 2.5% discount to the 10-day average price before some payment / settlement date may be used for calculation.

 

[YELNATS]

Due to the merger SGB's DRP won't operate for the SGB's 2 final dividends. Refer to their 23 October letter to shareholders.

You will be paid either by direct credit to your bank account or by cheque.

https://www.sharetrading.netwealth.com.au/do/secure/liveAnnouncements#

 

[Geoff]

You had me at "pizza" but the analogy failed because I got distracted by the idea of cooking one and masticating furiously.

 

[YELNATS]

Due to the merger SGB's DRP won't operate for the SGB's 2 final dividends. Refer to their 23 October letter to shareholders.

You will be paid either by direct credit to your bank account or by cheque.

https://www.sharetrading.netwealth.com.au/do/secure/liveAnnouncements#

Sorry, by "2 final dividends" I meant the final dividend plus the special dividend.

Here's a better link
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00893632

 

[baer]

That's right, there will be no DRP for St George shares any more. They sent a letter out recently that tells you if you will be getting a cheque or direct deposit.

For more details check out the http://www.stgeorgemerger.com.au/ website.

 

[coolacoola]

Anyone know when the new WBC shares will be given to St George holders to trade, thus increasing the volume on the ASX?

 

[Big_Daz]

Monday Dec 1. See following from the announcement on 13/11/08:

Key dates in relation to Share Scheme
Note: the following timetable is extracted from the Scheme Booklet dated 29
September 2008. The timetable is indicative only and, among other things, is subject
to the satisfaction or, where applicable, waiver of the conditions precedent to the
Share Scheme, and to all necessary Court and regulatory approvals. Any variation to
the timetable set out above will be announced to ASX and published online at
www.stgeorgemerger.com.au.
Effective Date
Court order lodged with ASIC and announcement
to ASX
Last day of trading in St.George Shares –
St.George Shares suspended from trading on
ASX from close of trading on ASX
Monday 17 November 2008
New Westpac Shares commence trading on ASX
on a deferred settlement basis
Tuesday 18 November 2008
Record Date
Scheme Record Date for determining entitlement
to the Share Scheme Consideration
Record date for determining entitlement to
St.George Share FY2008 Final Dividend and
Special Dividend
7.00pm (Sydney time) on Monday 24
November 2008
Implementation Date
Issue of New Westpac Shares and transfer of
St.George Shares to Westpac
Commencement of despatch to Share Scheme
Participants of holding statements confirming the
issue of New Westpac Shares
Last day of deferred settlement trading on ASX
for New Westpac Shares
Monday 1 December 2008
New Westpac Shares commence trading on a
normal settlement basis on ASX
Tuesday 2 December 2008
Payment of St.George Share FY2008 Final
Dividend and Special Dividend
Thursday 18 December 2008

 

[coolacoola]

So presuming that December 1 is the date, the stock would likely come under some pressure after this. Or have what we been seen happening in the last week continue right up until then?

 

[doubledark]

So presuming that December 1 is the date, the stock would likely come under some pressure after this. Or have what we been seen happening in the last week continue right up until then?

anyone?

 

[YELNATS]

So presuming that December 1 is the date, the stock would likely come under some pressure after this. Or have what we been seen happening in the last week continue right up until then?

All things being equal, (not that they ever are), there shouldn't be any reason to think that WBC's price will be pressured either up or down after December 1, that is, due to the effect of the merger with SGB.

The market has known about this merger for a long time and any price change to WBC should have already been factored in.

Refer to Nyden's "pizza shop" post # 2 above for an explanation.