Australia's ANZ to buy Suncorp bank arm for $3.3 bln, narrow gap with rivals
* ANZ to raise A$3.5 bln equity to fund deal
* ANZ withdraws from talks to buy MYOB Group
* Suncorp to return majority of net proceeds to shareholders
By Byron Kaye and Sameer Manekar
July 18 (Reuters) - Australia and New Zealand Banking Group ANZ.AX is buying the banking arm of insurer Suncorp Group SUN.AX for A$4.9 billion ($3.33 billion), as the smallest of Australia's major lenders seeks to revive growth at home after falling behind rivals.
The deal announced on Monday will boost ANZ's retail presence in a fast-growing domestic region and increase its assets in mortgages, the most lucrative business for Australian banks, by nearly a fifth, helping it to overtake National Australia Bank Ltd NAB.AX for third spot in the business.
ANZ had previously expanded rapidly in Asia, which it has been unwinding over the past few years. It lags Commonwealth Bank of Australia CBA.AX , Westpac Banking Corp WBC.AX and NAB by market value and some other metrics.
"It's not offshore, it's not away from their core capabilities, in terms of acquisitions this is not a bad one," said Hugh Dive, chief investment officer at Atlas Funds Management, which owns shares of ANZ and Suncorp.
ANZ aims to raise A$3.5 billion by issuing new stock to pay for the deal, in Australia's biggest equity capital raising of this year.
The buyout, which is subject to regulatory approval, will boost ANZ's mortgage book by A$47 billion to A$307 billion. It shows how important mortgages are to Australia's banks even as rising interest rates and cost-of-living pressures throttle house prices, with many economists forecasting a recession within a year.
ANZ missed most benefits of a COVID-19 driven real estate boom that saw home values leap by a quarter in the year to early 2022 due to delays in processing applications, analysts have said.
The lender said separately it had dropped talks to buy accounting software maker MYOB from private equity firm KKR & Co KKR.N . ANZ had disclosed the talks a week ago.
"(ANZ's) acquisition appetite is troubling, given growing recessionary risks and ANZ's poor operational performance to date," Jefferies analyst Brian Johnson said in a client note.
"The ANZ core franchise is already struggling, and adding more complexity during a period when MQG is driving up deposit costs looks ill-disciplined," he added, referring to mortgage challenger Macquarie Group Ltd MQG.AX .
Shares of ANZ were untraded as the bank readies its new stock issue. The new shares were being sold at A$18.90 each, a 12.7% discount to ANZ's closing price of $A21.64 on Friday, according to its filings.
Shares of Suncorp, which has been trying to offload an asset deemed non-core, rose 5.7%, against a broader market gain of 0.6%. The company will return most of the sale proceeds to shareholders.
The deal would represent a geographic expansion by Melbourne-headquartered ANZ into Queensland state, where Suncorp is based and has most of its business. ANZ sees itself as under-represented in Queensland and would keep the target's headcount and branding in the state for at least a few years, ANZ said.
ANZ would also commit to funding a host of energy and infrastructure projects in Queensland, including some tied to the 2032 Olympic Games in its capital Brisbane.
The deal would create a "simpler, stronger platform for growth" that "does advance our strategic ambitions", ANZ CEO Shayne Elliott said.
The purchase price amounted to 13.8 times past earnings for Suncorp's banking unit, ANZ said, below the price-earnings ratio of Suncorp's overall business but in the range of Australia's major banks.
Suncorp Chairman Christine McLoughlin said the agreed price "fairly values the bank" and reflects the "progress made on delivering our strategic objectives".
The deal presents the biggest task so far for new antitrust regulator Gina Cass-Gottlieb who started as chair of the Australian Competition and Consumer Commission (ACCC) in March. In a statement, the ACCC said its review of the deal would include the role of regional banks and competition with the majors.
"We will consider Suncorp's role as an effective competitor and challenger to the major banks in Queensland and in other states," an ACCC spokesperson said.
ANZ's Elliott said on a call with journalists that the bank hoped its status as the smallest of the major banks would help secure approval. "We look forward to making the case but we'll work through that over the coming months," he said. ($1 = 1.4734 Australian dollars)
Reporting by Byron Kaye in Sydney and Sameer Manekar in Bengaluru, with additional reporting by Scott Murdoch; Editing by Daniel Wallis, Richard Chang, Kenneth Maxwell and Muralikumar Anantharaman
Mga Kaugnay na Asset
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.