By Gareth Vaughan
ANZ, which has ongoing ambitions to grow in Asia, is again being linked with a potential tilt at the Asian centric British bank Standard Chartered. However, this time around analysts at Citigroup have hit on a key snag to such a deal from ANZ's perspective, - shareholder opposition to having their dividend franking reduced.
Dividend franking eliminates the double taxation of dividends. Citi analysts Craig Williams, Ronit Ghose, and Andrew Minton have issued a research report entitled Could a StanChart merger deliver benefits to ANZ? In it they suggest that in any ANZ takeover of Standard Chartered the Australian bank's shareholders could expect their franking rate to halve, something that wouldn't exactly be welcomed with open arms.
"We expect ANZ shareholders would not want to see their franking rate fall by half, as would be necessary in a conventional takeover offer. As with the BHP Billiton merger, if effected via a Dual-Listed Co (BHP and Billiton merged in June 2001 with listings on the Australian and London Stock Exchanges), ANZ Australian shareholders could retain full franking," the analysts write. "However a dual listed company would likely materially limit any merger cost savings."
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