By Alice Uribe


SYDNEY-- Suncorp Group Ltd. shares rose in Monday trade after news that the company is selling its banking unit to Australia & New Zealand Banking Group Ltd. for about 4.9 billion Australian dollars (US$3.33 billion).

Suncorp's shares rose 6.2% to A$11.79 after hitting A$11.90 earlier, making it the best performer on the ASX 200.

The acquisition of Suncorp Bank 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 at a 12.7% discount to ANZ's last closing price.

Suncorp said the deal supports the transformation of its insurance businesses as it looks to build market share and scale in Australia and New Zealand.

"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," Suncorp chief executive Steve Johnston said.

The bank will continue to operate under the Suncorp Bank brand for five years after the deal's completion as part of a licensing agreement. Suncorp said it will get a minimum fee of A$50 million for the use of the Suncorp Bank brand, to be received over time.

"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," said Suncorp.

The bank will continue to be led by its current chief executive, Clive van Horen, who will report to ANZ Chief Executive Shayne Elliott.


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


(END) Dow Jones Newswires

07-17-22 2121ET