ANZ today announced an agreement to acquire Suncorp Bank from Suncorp Group Limited, accelerating the growth of its retail and commercial businesses while also improving the geographic balance of its business in Australia.
ANZ Chief Executive Officer Shayne Elliott said: “The acquisition of Suncorp Bank will be a cornerstone investment for ANZ and a vote of confidence in the future of Queensland.
“With much of the work to simplify and strengthen the bank completed, and our digital transformation well-progressed, we are now in a position to invest in and reshape our Australian business. This will result in a stronger more balanced bank for customers and shareholders.
“We have admired the transformation that has occurred under the leadership of Steve Johnston and Clive van Horen and believe Suncorp Bank is a natural fit with ANZ given its culture, risk appetite and customer focus.
“ANZ has licenced the Suncorp Bank brand for five to seven years and we are committed to maintaining its current branch footprint in Queensland for at least three years post completion.
“This is a growth strategy for ANZ and we will continue to invest in Suncorp Bank and in Queensland for the benefit of all stakeholders,” said Mr Elliott.
Suncorp Bank will continue to be led by current CEO Clive van Horen. For team members, it is business as usual with no planned changes to employment conditions and the acquisition will not result in any net job losses in Queensland for Suncorp Bank for at least three years post completion.
“Importantly, the same great staff that serve customers today will serve customers tomorrow as members of the Suncorp Bank team and we are committed to building on the great service customers have already been experiencing,” Mr Elliott said.
Commitment to Queensland
- Allocating $15 billion of new lending as part of ANZ’s existing renewable lending commitments to support Queensland renewable projects and green Olympic Games infrastructure over the next decade.
- $10 billion of new lending for energy projects particularly those targeting bioenergy and hydrogen over the next decade.
- $10 billion of lending made available to support Queensland businesses over the next three years.
Mr Elliott said: “ANZ is committed to making a meaningful contribution to the economic and social prosperity of Queensland and today’s announcement will see ANZ increase its presence, and we believe improve competition, in one of Australia’s most important regions.
“Since March 2020, Queensland has recorded better economic growth, better workforce participation and more interstate migration than any other state or territory in Australia. It contributes 18% to Australia’s GDP and we believe we can use the resources at our disposal to further contribute to its continued success.
“We opened our first branch in Brisbane in 1851 and since then we’ve built a great business in Queensland, particularly in Institutional banking.
“While we have an outstanding team already supporting our customers, we recognise in order to provide better services and improve competition for all Queenslanders we need to build on our existing retail banking presence.
“We know there will rightly be questions from Government and regulators about the competition aspects of this transaction. As the smallest of the major banks, we believe a stronger ANZ will be able to compete more effectively in Queensland offering better outcomes for customers,” he said.
ANZ will also look to use its experience in sustainable finance to support Queensland’s ambition to reduce carbon emissions, as well as providing funding for Brisbane 2032 Olympics green infrastructure.
“While we already play a key role in supporting Queensland customers, particularly those exporting goods overseas, we recognise our role in assisting the State as it transitions to a lower carbon future. This is a key reason why we have set aside $15 billion of new lending to support the Government’s ambition of 50% renewable energy by 2030 and green infrastructure for the 2032 Olympic Games,” Mr Elliott said.
Transaction details
- Agreed to acquire Suncorp Bank at a purchase price of $4.9 billion, representing a P/E of 13.8x[4] pre synergies or 9.3x[5] post full run-rate synergies and 1.3x P/NTA.[6]
- Expected to be EPS neutral pre synergies on a pro forma FY23 basis, and low single digit EPS accretive including full run-rate synergies on a pro-forma FY23 basis.5,[7],[8]
- Expected to be ROE neutral pre synergies on a pro forma FY23 basis, and marginally ROE accretive when including full run rate synergies on a pro-forma FY23 basis.5,7
- The expected net impact on Level 1 and Level 2 CET1 is approximately 28bps and -34bps respectively on a pro-forma basis as at June 2022[9].
- Expected annual cost synergies of ~$260m pre-tax (~35% of Suncorp Bank FY22 reported cost base).[10]
- The ANZBGL Board anticipates a FY22 final dividend of 72 cents per share, subject to prevailing conditions.[11]
The acquisition is subject to a minimum completion period of 12 months and to certain conditions. These include Federal Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State Financial Institutions and Metway Merger Act 1996 (Qld). Completion is expected in the second half of calendar year 2023.
Equity Raising
To help fund the acquisition, ANZ has today announced a fully underwritten pro rata accelerated renounceable entitlement offer (Entitlement Offer) to raise ~$3.5 billion of ANZ shares.
Under the Entitlement Offer, eligible institutional and retail shareholders will be entitled to subscribe for 1 new ANZ share (New Share) for every 15 ANZ shares held on the record date of 7.00pm (Melbourne time) on 21 July 2022 (Record Date).
The Entitlement Offer will be conducted at $18.90 per New Share (Offer Price) which represents:
- a 12.0% discount to the theoretical ex-rights price (TERP)[12] of $21.47; and
- a 12.7% discount to ANZ’s last closing share price of A$21.64 on 15 July 2022.
Approximately 187 million New Shares will be issued under the Entitlement Offer which represents around 6.7% of ANZ’s existing shares on issue. The New Shares issued under the Entitlement Offer will rank equally with existing ANZ shares.
ANZ Director’s (and their respective associates) may acquire New Shares under the Retail Entitlement Offer to the extent they are Eligible Retail Shareholders.
ANZ’s shares have been placed in trading halt on the ASX and NZX to enable completion of the institutional component of the Entitlement Offer. Trading is expected to recommence on 21 July 2022.
Institutional Entitlement Offer
The institutional component of the Entitlement Offer opens today and closes on 19 July 2022. Eligible institutional shareholders can choose to take-up all, part or none of their entitlement under the Entitlement Offer.
Institutional entitlements not taken-up, together with the entitlements of ineligible institutional shareholders, will be sold under the institutional shortfall bookbuild which opens on 19 July 2022 and closes on 20 July 2022, with any premium above the Offer Price (net of any applicable withholding tax) paid to the relevant shareholders.
Retail Entitlement Offer
Eligible retail shareholders in Australia and New Zealand on the Record Date will be able to participate in the retail component of the Entitlement Offer (Retail Entitlement Offer) at the Offer Price. The Retail Entitlement Offer opens at 9.00am (Melbourne time) on 29 July 2022 and closes at 5.00pm (Melbourne time) on 15 August 2022.
Eligible retail shareholders under the Entitlement Offer may:
- elect to take-up all or part of their entitlement before the Retail Entitlement Offer closes at 5.00pm (Melbourne time) on 15 August 2022 and receive New Shares; or
- sell or transfer all or part of their entitlements. Retail entitlements may be traded on the ASX from 21 July 2022 (on a deferred settlement basis) and 29 July 2022 (on a normal settlement basis) to 8 August 2022.
Retail entitlements not taken up, along with the entitlements of ineligible retail shareholders, will be sold under the retail shortfall bookbuild to be conducted on or about 18 August 2022, with any premium above the Offer Price (net of any withholding tax) paid to the relevant shareholders.
Every eligible retail shareholder will receive by email (if they have elected to receive electronic communications) or post a detailed information booklet (Retail Information Booklet) and a personalised entitlement and acceptance form.
ANZ shareholders outside of Australia or New Zealand and retail shareholders who do not satisfy the other eligibility criteria are ineligible to participate in the Retail Entitlement Offer.
In particular, ANZ shareholders in the United States are not eligible to participate in the Retail Entitlement Offer, and those who are acting for the account or benefit of persons in the United States (including custodians and nominees) are not eligible to participate on behalf of those persons.
