Westpac may have to boost $17.6 billion St George bid

By Anirban Nag

SYDNEY (Reuters) - Westpac Banking Corp Ltd (WBC.AX: Quote, Profile, Research, Stock Buzz), which has bid $17.6 billion for St George Bank (SGB.AX: Quote, Profile, Research, Stock Buzz) in the biggest banking takeover ever in Australia, is bracing for rival offers to emerge that could push the price tag even higher.

Speaking to Australia Broadcasting Corporation (ABC) television on Sunday, Westpac chairman Ted Evans said "never say never" when asked whether the bid would be raised.

Soon after the interview, Westpac issued a statement saying much the same thing: "Westpac considers that it has made a full and fair offer which is compelling both in terms of its price and terms. However, Westpac reserves the right to review its offer if it considers that circumstances warrant this."

Last week, Westpac offered 1.31 of its own shares for every St George share. The offer was accepted by the St George board on Tuesday but speculation has been rife that another bank may start a bidding war.

"These are early days and this is certainly not a done deal," said Craig James, a senior analyst at Commonwealth Securities in Sydney. "It is likely that the National Australia Bank, ANZ and the Commonwealth Bank will show some interest and there will be a fair bit of competition."

The combined entity would have a market capitalization of around A$66 billion ($62.3 billion), overtaking Commonwealth Bank of Australia's (CBA.AX: Quote, Profile, Research, Stock Buzz) A$61 billion. It would rank second to National Australia Bank (NAB.AX: Quote, Profile, Research, Stock Buzz) by asset value.

A battle in the banking industry would run alongside the bid by BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research, Stock Buzz) (BLT.L: Quote, Profile, Research, Stock Buzz), the world's largest miner, for rival Rio Tinto Ltd/Plc (RIO.AX: Quote, Profile, Research, Stock Buzz) to create a mining titan. Rio is fighting the takeover.

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