Westpac announces acquisition

Westpac Bank has announced plans to acquire RAMS franchise distribution business for $140 million.

According to Westpac, the deal will include the RAMS brand, franchise network of 92 stores operated by 53 franchisees, associated mortgage origination and servicing systems and contracts needed to run the distribution business.

The bank is not acquiring the ASX-listed RAMS Home Loans Group or its existing mortgage book, but they will be assuming the rights and obligations between RAMS and its franchisees.

Chief executive officer Westpac David Morgan said the acquisition would extend Westpac’s retail footprint by more than 10 per cent.

“The RAMS franchise model has proven to be successful and this transaction will allow it to continue,” he said.

“This creates a sustainable future for franchisees and the RAMS brand. At the same time, the funding arrangements should provide support for the financing of RAMS’ existing mortgage book.”

Morgan said that the acquisition will separate out RAMS franchise distribution business from its funding arm and will be operated under the RAMS brand, which is separate from existing Westpac channels, in order to minimise disruption to RAMS customers and franchisees.

“We will retain and support RAMS’ current management, including CEO Greg Kolivos to drive future growth,” Morgan said.

The deal is expected to be completed in January 2008 and is subject to RAMS’ shareholder approval. If approved, Westpac will fund up to $500 million in mortgages settled from November 15, 2007, until the formal completion of the acquisition in 2008.

Westpac is also planning to provide $1.5 billion to refinance RAMS’ extendable commercial paper program.