Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James and M&M, now that the ANZ's Suncorp takeover will go ahead despite ACCC rebuff. In your opinion, what will now occur for people holding one, or the other, or both stocks. Will there be a monetary benefit coming from one of the two stocks? Also, do you see Suncorp maintaining its current share price? Love your work, Thank you.
Hi Tony,
We’ve now witnessed the market’s kneejerk reaction to the ACT decision on Tuesday with SUN rallying and ANZ down smalls. Moving forward we believe both stocks will progress without a major focus on the deal, which after all was no major surprise. This will change when we see how well ANZ integrates SUN’s banking division over the coming years.
In terms of the structuring of the deal, ANZ is paying SUN cash which they raised in an equity placement at $18.70 all the way back in July 2022. Suncorp have said their intention is to return the majority of proceeds to shareholders. So, all things being equal, shareholders of SUN should expect a cash distribution of ~$4bn. Given SUN’s current market cap of $19bn, it would represent ~21% of the share value returned as cash, something like $3.15 per SUN share.
ANZ $27.94: we like the medium/long term growth opportunity afforded ANZ by its purchase of SUN banking assets. Through 2024 we can see the bank consolidating recent gains in the $27.50-$29.50 region – MM is long ANZ in our Active Growth Portfolio.
SUN $15: we believe SUN is better positioned post the sale enabling the insurer to focus on its core business, but we believe the stock is fully valued above $15.
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