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<b>CBA rattles the four pillars</b>

    Headline: CBA rattles the four pillars
Source: Euromoney
Date: April 2000
Author: Graham Hand

Any deal that creates a country's largest domestic bank, its top fund manager and the second biggest insurer will have ramifications for all market participants. The Commonwealth Bank of Australia's (CBA's) takeover of Colonial Limited also provides a springboard for CBA to launch its international aspirations.

It is the largest takeover in Australian corporate history. CBA is offering seven of its shares for every 20 of Colonial's in a pure scrip-for-scrip deal. Other than entitlement to dividends, there is no cash on the table at this stage. Based on a CBA share price pre-announcement of A$25, the deal values Colonial at around A$9 billion. CBA will not know until mid-May whether the transaction will be approved by the necessary 50% (by number) and 75% (by value) of Colonial's shareholders. It gives time for another party to launch a counter-offer.

The CBA offer is a stunning last hurrah for Colonial's managing director, Peter Smedley, who rebuilt it from an inauspicious mutual life office into the leading Allfinanz house in Australia. Following the bargain purchase of the State Bank of New South Wales in 1994, Colonial listed on the Australian Stock Exchange in May 1997 at a retail offer price of A$2.60.

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