National Australia Bank (NAB) has inked a scheme implementation deal to fully acquire 86 400 Holdings, the holding company of neobank 86 400.

The agreement has been unanimously approved by the independent directors of 86 400.

They have recommended its shareholders to vote in favour of the scheme proposed by NAB.

Deal terms

NAB has agreed to buy 86 400 in a deal valued at nearly A$220 ($168.5m).

NAB has subscribed for a minority stake in 86 400 to support the neobank’s growth. It currently holds 18.3% stakes in 86 400.

The lender has proposed to buy the remaining shares via the scheme implementation agreement.

Subject to the receipt of regulatory approvals and the go-ahead by the Federal Court to implement the scheme, the transaction is expected to be happen in mid-2021.

The transaction is awaiting approval from the Treasurer, the Australian Prudential Regulation Authority (APRA) and the Australian Competition and Consumer Commission (ACCC).

Synergy

The deal follows NAB’s plans in April last year to boost the growth of UBank – an Australian direct bank that operates as a division of NAB.

NAB will combine the 86 400’s customer base, brand, and employees with UBank to accelerate its growth.

86 400 and UBank will continue to operate independently until the transaction is completed.

As of 15 January 2021, 86 400 had over 2,500 brokers, 85,000 customers, A$375m in deposits, and A$270m in mortgages.

Comments

86 400 CEO Robert Bell said: “86 400 and its customers will benefit from NAB’s capital and balance sheet strength and investment spend to support accelerated growth and continued innovation, helping even more Australians take control of their money.”

UBank CEO Philippa Watson said: “UBank has a proud 12-year history of innovation as a pioneering digital bank and today serves more than 600,000 customers to help achieve their financial goals.

“Combining with 86 400 will bring together UBank’s established business and 86 400’s experience and technology platform to meet the changing needs of our customers.”

NAB COO Les Matheson said: “Bringing together UBank and 86 400 is consistent with NAB’s long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace.

“The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers.”