Heartland Group and TSB merge in NZ$620M deal
Heartland Group (ASX:HGH) announced the signing of a conditional merger implementation agreement to acquire and merge with TSB Bank.
The proposed NZ$620 million transaction will see Heartland acquire all TSB shares on issue from the Toi Foundation, subsequently merging Heartland Bank and TSB to create a formidable new entity named TSB Heartland Bank.
The tie-up aims to establish a "challenger bank of scale" specifically focused on regional New Zealand.
By combining Heartland’s specialist product expertise with TSB’s cost-effective funding platform and transactional banking capabilities, the full-service bank intends to increase competition and consumer choice.
The increased scale and product diversification are expected to drive financial efficiency, support an uplift in the merged bank's long-term credit rating, and deliver material cost synergies progressively over a three-year post-completion period.
The $620 million consideration, representing 76% of TSB’s book value, involves a mix of ordinary equity in Heartland—giving Toi Foundation a 17.5% shareholding—alongside cash dividends, a vendor loan, and Tier 2 capital subscriptions.
Targeting completion in December 2026, the deal remains subject to key conditions, including Taranaki community consultations, Heartland shareholder approval, and regulatory clearances across both New Zealand and Australia.
Heartland, which recently expanded via the acquisition of Challenger Bank in Australia, expects transaction costs to total approximately NZ$15 million, impacting net profits across the 2026 and 2027 financial years.
