Bendigo Bank has rebuffed Bank of Queensland's initial takeover offer, arguing that the proposal doesn't provide sufficient value and certainty for shareholders.
According to Bendigo chairman Robert Johanson, upgraded 2007 earnings guidance and shareholder returns over the last 10 years means the prospect for the bank, on a stand alone basis, remained excellent.
"The board could only recommend a change-of-control transaction that it was confident would deliver certain and compelling value to Bendigo Bank shareholders," Johanson said. "In the board's view, the value under the Bank of Queensland proposal is neither certain nor compelling."
Differing business models and philosophies also reflected added risk in merging two such different organisations, the board said.
Bank of Queensland offered Bendigo Bank shareholders 0.748 Bank of Queensland shares and $5.50 for each Bendigo Bank share.
According to Aspect Huntley analyst Peter Esho, with such a strong retail base amongst shareholders (around 70 per cent) Bendigo will be looking at Bank of Queensland to sweeten the deal, despite the price offered being at the top end of the spectrum.
"Bendigo could be looking at assurances over branch preservation and jobs security generally, rather than more cash," Esho said.
"Possibly they could also be looking for a larger stake in the merged entity, through a better scrip offer."
