Australia And New Zealand Banking Group Limited (ANZ)
HOLD

ACCC rains on SUN deal

 4 Aug 2023
Sector: Financials

MERGERS AND ACQUISITIONS

Need To Know

  • ACCC deny ANZ’s request to acquire Suncorp Bank
  • Decision to be appealed with the Australian Competition Tribunal
  • The silver lining. Removes perception of overpaying for a mortgage book, whilst increasing the prospects of capital management

Investment Implications

ACCC is not satisfied that the acquisition would not “substantially lessen competition” in the supply of national home loans, SME banking, and QLD agribusiness banking.

“Proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is concentrated”.

ANZ will appeal the ACCC rejection to the Australian Competition Tribunal (ACT), a process which can take up to 4 months. The ACT appeal process will consider the merits of the information provided to the ACCC.

If the ACT appeal process fails, we believe SUN will continue to push ahead with the sale of the Bank. Bendigo and Adelaide Bank (BEN) are likely to be interested parties, one that the ACCC would be more comfortable approving, albeit likely at a lower price vs the $4.9bn or 1.3x book that ANZ Group (ANZ) were willing to pay.

In mid-2022 ANZ raised just over $3.5bn to fund the potential acquisition of SUN’s Bank. Ultimately, if ANZ is not allowed to purchase SUN’s Bank we would expect ANZ to return that capital to shareholders, rather than keep the capital on the balance sheet awaiting a new idea. 

Ultimately the SUN acquisition in our view was to re-address market share losses in residential mortgages. Yes, there would be a decent-sized pool of synergies and funding benefits ANZ could benefit from, but ultimately this was never a must-have acquisition for ANZ. We retain our Hold Rating on ANZ. 

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Stock Overview

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Company Overview

ANZ offers banking and finance products and services globally, with divisions serving customers in Australia, New Zealand, and the Pacific region. It caters to consumers, businesses, and governments.

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