Heartland Group Holdings (ASX:HGH, NZE:HGH) entered into a conditional merger implementation agreement to acquire TSB Bank from Toi Foundation for NZ$620 million, with the transaction to result in the merger of Heartland Bank and TSB into a new entity, TSB Heartland Bank, according to Tuesday filings with the Australian and New Zealand bourses.

The aggregate consideration paid to Toi Foundation represents 76% of TSB's book value and comprises ordinary equity in Heartland giving Toi Foundation a 17.5% stake, a pre-completion cash dividend from TSB, a vendor loan to Heartland, and a Tier 2 capital subscription in Heartland Bank, per the filing.

The company anticipates around NZ$34 million in annual pre-tax synergies once fully realized, which are expected to enhance earnings and support dividend growth prospects, the filing said.

The transaction, expected to close in December, is still contingent on shareholder approval, regulatory approvals, and consultation with the Taranaki community, the filing added.