By Alice Uribe


SYDNEY--Australia & New Zealand Banking Group Ltd. said it has agreed to buy regional lender Suncorp Bank for about 4.9 billion Australian dollars (US$3.3 billion), in a deal that could accelerate growth of its retail and commercial businesses.

The acquisition of Suncorp Bank from Suncorp Group Ltd. will be funded by selling new shares to raise about A$3.5 billion and from existing capital, ANZ said Monday. The entitlement offer price of A$18.90/share is a 12.7% discount to ANZ's last closing price.

ANZ said the deal will boost growth of its retail and commercial businesses and also improve the geographic balance of its business in Australia.

"With much of the work to simplify and strengthen the bank completed, and our digital transformation well-progressed, we are now in a position to invest in and reshape our Australian business. This will result in a stronger, more balanced bank for customers and shareholders," said Chief Executive Shayne Elliott.

Suncorp Bank, based in Australia's Queensland state, has a home loan portfolio of about A$47 billion, A$45 billion in deposits and A$11 million in commercial loans.

Suncorp said its insurance operations in both Australia and New Zealand will not form part of the transaction, and that its head office will continue to be in Queensland.

"As a dedicated insurance business we will be singularly focused on meeting the needs of our customers and communities at a time when the value of insurance has never been greater," said Suncorp Chief Executive Steve Johnston.

ANZ said Suncorp Bank would initially operate under its existing Authorized Deposit-taking Institution license, with no changes to the total number of Suncorp Bank branches in Queensland planned for at least three years from completion.

Suncorp Bank will continue to be led by Clive van Horen who will report to Mr. Elliott, and will join ANZ's executive committee post completion.

Suncorp will get a minimum fee of A$50 million for the use of the Suncorp Bank brand, to be received over time. The company said it expects the transaction to yield net proceeds of A$4.1 billion, net of transaction and other costs.

"Consistent with the approach taken in previous divestments, the current intention is to return the majority of proceeds to shareholders," said Suncorp.

Suncorp has an agreement with ANZ to license the Suncorp brand for the banking business for a period of five years post completion. Suncorp said that the brand license period may extend for up to two years. If extended, Suncorp will receive an additional fee of A$10 million per year.

Suncorp on Monday reconfirmed its commitment to its previously announced fiscal 2023 targets across all its businesses.

ANZ's Suncorp Bank acquisition is subject to a minimum completion period of 12 months and to certain conditions, including Federal Treasurer approval. During this time Suncorp Group will continue to run the bank.

ANZ on Monday also confirmed that it had withdrawn from discussions with Kohlberg Kravis Roberts & Co. about a potential acquisition of accounting software company MYOB.


Write to Alice Uribe at alice.uribe@wsj.com


(END) Dow Jones Newswires

07-17-22 1937ET