ANZ taking over Suncorp Bank
When you just want to acquire something...
Last week, there is news that Australia and New Zealand Banking Group Limited (ANZ) is in talk to acquire MYOB from KKR for AUD 4.5b.
Then within the week, the MYOB deal was “dropped” and ANZ is acquiring Suncorp’s banking operation for AUD 5b instead.
The sequence of the events just highlight to me that ANZ is still quite undecided what to do till last week???
This really do not reflect well on the management - CEO Shayne Elliott and his potential successor Maile Carnegie.
The decision to acquire MYOB is totally bizarre. Why would any SME like to have their bank looking at their live cashflow position?
ANZ is already grappling with the update of their technology platform1 and here they are contemplating to acquire an old legacy accounting platform? Just imagine the nightmare of doing something like this.
So the dropping the MYOB deal seems like a no-brainer but why was it contemplated at all?
The deal to buy Suncorp’s bank is a little more understandable since the last time an Australian regional bank is up for grabs is in 2008.
Since ANZ has been losing market shares pre-COVID due to their inability to underwrite mortgage loan quickly2, this acquisition would bump their market share back up to their pre-Covid market share of 15% for them to start losing again???
Pricing at 1.3x net tangible assets (NTA), the Suncorp bank acqusition is expensive since regional banks are going for 1x NTA. With a rising rates and a slowing mortgage market in Australia, this seems like the worst time to be buying something above market price.
For the fund raising effort to buy from Suncorp, investors would be offered to buy shares at AUD 18.90 to raise AUD 3.5b.
This would have been fine if ANZ had not buy back AUD 1.5b worth of shares at AUD 27.70 which was just completed 4 months ago!
The above just show how bad capital allocation could be when there is no strategic planning in place!
Everything is pointing towards the possibility that things are just not going to work out so well for ANZ in the years ahead.
Maile Carnegie the likely successor of Shayne Elliott seems to be the culprit here for their failure in their digital transformation. ANZ Plus looks and sound like a disaster.
Due to a lack of focus on mortgage and a lack of technology…