ASX 200 flat, Suncorp surges, NAB makes Citi acquisition

Suncorp shares jump after releasing its FY21 report.

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The S&P/ASX 200 Index (ASX: XJO) was flat today, at 7,538 points.

Here are some of the highlights from the ASX:

Telstra Corporation Ltd (ASX: TLS)

One of the biggest ASX 200 shares to announce some news today was Telstra.

The big telco said that it is acquiring MedicalDirector, a leading GP clinical and practice management software company for an enterprise value of $350 million.

Management said that this acquisition was a key step for Telstra Health to offer a connected and improved digital health experience for all.

Telstra said that its health division has transformed substantially over the past five years and this announcement reflects its continuing maturity as a business and its importance as part of Telstra’s long-term growth strategy. The telco also said it reflects its continued growth into a global business, including strengthening its presence in the UK.

MedicalDirector’s software as a service (SaaS) solutions support GPs and other specialists and pharmacies in the Australian healthcare industry. It currently supports approximately 23,000 medical practitioners and is used to deliver more than 80 million consultations a year.

Telstra said it would significantly increase investment in MedicalDirector to grow the business.

The Telstra share price ended the day higher by around 0.5%.

National Australia Bank Ltd (ASX: NAB)

A large deal was announced by ASX 200 bank NAB. It’s going to buy Citigroup’s Australian consumer business.

This acquisition, which still requires regulatory approvals, is structured primarily as an asset and liability transfer, with NAB to pay Citigroup cash for the net assets of the business it’s buying, plus a premium of $250 million.

NAB said that based on the anticipated increase in risk-weighted assets of $8.9 billion plus the premium to net assets to be paid on completion, the required equity is approximately $1.2 billion. This valuation implies a multiple of 8x the Citigroup consumer business pro forma net profit of $145 million for the 12 months to June 2021.

NAB believes it can achieve pre-tax cost synergies of approximately $130 million per annum over three years, with the majority of that achieved in the first two years.

The deal is going to be fully funded by NAB’s existing balance sheet. The impact to its capital position is expected to be 32 basis points of NAB’s CET1 capital ratio. Management said the bank remains “well capitalised” with a pro forma CET1 ratio at March 2021 of 11.83%. That’s above its target range of 10.75% to 11.25%.

The NAB share price went up around 1% today.

Suncorp Group Ltd (ASX: SUN)

The Suncorp share price went up around 8% today after the ASX 200 banking and insurance company’s FY21 result.

Suncorp said that its Australian insurance profit rose by 42.4% to $547 million. Banking profit grew by 69% to $419 million. The New Zealand profit fell by 18.4% to $200 million. Total net profit from continuing operations increased 33% to $1.17 billion. Cash earnings grew 42.1% to $1.06 billion.

The business declared a total ordinary dividend that was 83.3% higher to 66 cents. Suncorp’s board also declared a special fully franked dividend of 8 cents per share. It also decided on an on-market share buyback of up to $250 million.

Suncorp CEO Steve Johnston said:

While COVID-19 and the weather will continue to challenge our customers and our team, we know we have good momentum and a program of work that will further improve outcomes for our customers and shareholders.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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