WESTPAC Bank could be forced to sweeten its $18 billion merger proposal for St George Bank, with increasing concerns from some shareholders about the value of the deal.
"This is a highly strategic asset and the offer provides no premium to the long-term average at which the stocks have traded," one shareholder, who will not be accepting the offer, told The Australian yesterday.
"There has been a lot of scare-mongering in the media to help get the deal across the line, but the fact is that the St George loan book has a better mix of exposures and is well-placed to outperform the other banks as credit quality for the sector deteriorates.
"The deal with Westpac is potentially a good one, but the current offer ratio falls short by about 10-15 per cent."
Westpac has offered 1.31 Westpac shares for each St George share.
The St George board has recommended the proposal, so long as it remains in shareholders' best interests. One institutional shareholder has also expressed reservations about the deal.
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Last month, Australian Shareholders Association chief Stuart Wilson said the changing "dynamics" now warranted a higher offer, referring to St George's recent results and share price performance.
St George's shares yesterday firmed 5c to $30.45 and Westpac's rose 14c to $2 ...