In major news on Australian stocks, ANZ Group Holding Limited (AU:ANZ) got a green light for its $3.3 billion (AU$4.9 billion) deal to acquire Suncorp Bank from Suncorp Group Limited (AU:SUN). Australian Treasurer Jim Chalmers has given the final go-ahead on the deal after it was initially announced in July 2022, stating that it would not be in the national interest to block this transaction.
With this deal approval, ANZ will now be the third-largest bank in Australia, replacing National Australia Bank Limited (AU:NAB). ANZ shares traded down by 0.18%, while Suncorp Group gained 3.6% on Friday.
ANZ ranks among the top four banks in Australia, catering to around 8.5 million retail and business customers. Meanwhile, Queensland-based Suncorp Bank is part of Suncorp Group and provides banking services.
ANZ-Suncorp Deal Rationale
In 2022, ANZ agreed to acquire Suncorp’s banking business to further expand its retail and commercial operations and improve its geographic presence in Australia. According to ANZ’s CEO, Shayne Elliott, the deal marks a “significant milestone” for the bank in its strategy to broaden its footprint in Queensland.
In addition, the acquisition comprises $47 billion in home loans with a robust risk profile, $45 billion in high-quality deposits, and $11 billion in commercial loans.
As part of the agreement, ANZ will retain its own as well as Suncorp Bank’s existing branch network throughout Australia for the next three years. Moreover, the approval conditions restrict any job cuts for the next three years across Australia.
The deal was initially blocked by the Australian Competition Tribunal (ACT) due to concerns about potential limitations on competition in the banking sector. However, in February 2024, ACT approved the deal after both companies appealed the decision.
The acquisition is expected to be completed by the end of July 2024.
Is ANZ a Good Stock to Buy?
As per the consensus among analysts on TipRanks, ANZ stock has been assigned a Hold rating based on 11 recommendations. The ANZ share price target is AU$28.35, which is almost similar to the current trading levels.
