Suncorp (SUN): this morning, Treasurer Jim Chalmers approved ANZ’s acquisition of Suncorp Bank. The HNW Portfolio Equity and Income portfolios have a 3% weight to SUN, which is a nice (but unexpected) end-of-year present for our investors.
Key points:
- Background: In July 2022, Suncorp announced that they had agreed to sell the Suncorp Bank to ANZ, the first major bank acquisition since the GFC (St George or Bankwest)
- Regulatory Dance: In August 2023, The Australian Competition and Consumer Commission (ACCC) blocked the acquisition on the basis that the $4.9 billion acquisition was likely to substantially lessen competition across the supply of home loans nationally, small and medium enterprise banking and agribusiness banking in Queensland.
- Show me the money: We expect that post the agreement SUN will conduct a $3-3.50 capital return to shareholders and become a pureplay insurer. No details as of yet but this is likely to be tax effectitive return of capital.
Our Take : Atlas views that this deal is a win-win for both companies as it frees up regulatory capital for Suncorp’s insurance business, and ANZ receives a bigger mortgage portfolio. Atlas saw this as a win-win for both companies as it freed up regulatory capital for Suncorp’s insurance business, and ANZ received a bigger mortgage portfolio. Both ANZ and Suncorp are held in the Portfolio.
Suncorp finished up +4% to $17.41, following the cash from the deal being used for a shareholder return.
