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ANZ will not be selling UDC Finance to HNA Group

UDC Finance is an asset finance business and a wholly owned subsidiary of Australia and New Zealand Banking Group (ASX: ANZ). Almost a year ago ANZ announced that it would be selling UDC Finance to HNA Group for around NZ$660 million based on FY16’s result of net profit after pax (NPAT) of NZ$59 million.

The transaction was also to include the Esanda name and trademarks in Australia and New Zealand.

The original thinking behind the move was that it would reflect the continued focus of ANZ to simplify its business and capital efficiency.

However, a few weeks ANZ was informed by the New Zealand Overseas Investment Office (OIO) that HNA Group’s application to acquire UDC Finance was declined.

At the time David Hisco, ANZ CEO, said that the sale would remain in place, however it would need HNA to overturn the OIO decision to go ahead. UDC Finance is a profitable company and it would continue to operate as per normal.

The transaction was not a huge deal for ANZ. The company stated that the UDC transaction proceeds would be equivalent to around 10 basis points of APRA CET1 capital.

Therefore, it comes as no surprise today that ANZ announced the agreement to sell UDC Finance to HNA Group will not proceed and would be terminated in accordance with the contract timeframe.

Mr Hisco said “Following the termination of the agreement, we’ll continue to assess our strategic options regarding the future of UDC, although there is no immediate requirement to do anything”.

The ANZ share price is currently down 0.56% on the back of this news and the trailing grossed-up dividend yield currently sits at 8%.

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