ANZ’s $3.2 Billion Suncorp Deal to Progress After Court Win

(Bloomberg) — ANZ Group Holdings Ltd. won its fight to overturn a competition watchdog decision to block its A$4.9 billion ($3.2 billion) purchase of Suncorp Group Ltd.’s banking arm.

The Australian Competition Tribunal announced its decision in the Federal Court in Sydney on Tuesday. It will now require final approval from the Queensland state government and Treasurer Jim Chalmers.

“This is a significant milestone and an important step forward in the process, however, we still have further conditions to meet,” ANZ Chief Executive Officer Shayne Elliott said in a statement. “We strongly believe that the acquisition presents significant opportunities for ANZ, Suncorp Bank, and our customers, as well as major public benefits including for Queensland.”

Suncorp shares gained 6.1% as at 12:04 p.m. Sydney time, hitting the highest price since September 2018. ANZ’s shares slipped 3.5%.

E&P Capital banking analyst Azib Khan said the acquisition’s completion was expected to weigh on ANZ’s relative share price performance.

“We also believe the acquisition will add to ANZ’s cost challenges and that the acquisition will not significantly shift the dial in terms of ANZ’s capital allocation,” he wrote in a note.

National Interest

The Australian Competition and Consumer Commission had rejected the deal in August after ANZ had attempted to buy Suncorp’s bank in 2022 as part of plans to expand its retail banking franchise.

The ACCC and Bendigo Bank, which also opposed the merger, said the acquisition would reduce competition in the home loan market by making it easier for the major banks to engage in successful coordination.

The tribunal said the move wouldn’t substantially lessen competition as the potential for coordination had reduced due to “material asymmetry” in major banks’ market shares. The body was also satisfied the proposed acquisition represented a net public benefit, as any adverse impacts from a reduction in competition were unlikely to outweigh efficiencies forecast to arise.

“The emergence of Macquarie as a ‘maverick’ in the market and the increasing use of brokers has reduced consumer-choice frictions, facilitating greater customer switching,” Justice John Halley said when delivering the ruling, broadcast live on YouTube.

Still, Treasurer Chalmers said a decision over final approval would be announced in due course.

“I will carefully and methodically consider whether the proposed acquisition is in the national interest,” he said in a statement.

Applicants and other interested parties can seek a review by applying to the Federal Court.

What Bloomberg Intelligence Says:

ANZ is set to be Australia’s second-largest bank by assets after an independent tribunal rejected the competition watchdog’s blocking of the A$4.9 billion takeover of Suncorp Bank. A successful deal will add about 4% to the ANZ’s profit. The deal dilutes ANZ’s ROE as the target’s nearly A$80 billion in assets earn a return of 0.6%, vs. ANZ’s 0.7% in 2023. Suncorp said it would return most of the A$4.1 billion cash proceeds to shareholders, lifting the dividend yield to 30% based on the Feb. 19 close —Matt Ingram, senior industry analyst

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