The Suncorp Group Ltd (ASX: SUN) share price is sky high after the company accepted a near $5 billion takeover bid for its banking namesake.
The sale will see the financial services giant working exclusively in insurance. The move is said to support its goal to become Trans-Tasman's leading insurance provider.
At the time of writing, the Suncorp share price is trading at $11.76, 5.95% higher than its previous close.
Let's take a closer look at the transformative takeover announced today.
Suncorp share price leaps on $5b bank sale
The Suncorp share price is surging on news Australia and New Zealand Banking Group Ltd (ASX: ANZ) will be snapping up Suncorp Bank for $4.9 billion. That represents a $1.3 billion premium on the bank's net tangle assets.
Suncorp expects to reap $4.1 billion of net proceeds from the sale. It plans to return most of the cash to shareholders.
The sale of Suncorp Bank is the company's latest move to simplify its business. It follows the sale of its interest in RACT Insurance in December and its Australian Wealth business in March.
Suncorp chair Christine McLoughlin said:
Both [Suncorp's banking and insurance] businesses will benefit from a singular focus on their growth strategies and investment requirements.
Our purpose of building futures and protecting what matters – the focus of our company for over 100 years – will remain at our core and enable our people to deliver on our vision to create the leading Trans-Tasman insurance company.
Suncorp will focus on its portfolio of insurance brands including AAMI, GIO, Shannons, Apia, Vero, and its own Suncorp brand following the transaction.
ANZ's acquisition of Suncorp Bank will see it taking on $47 billion of home loans, $45 million in high-quality deposits, and $11 billion in commercial loans.
Suncorp and ANZ commit to Queensland
Both Suncorp and ANZ have doubled down on their commitment to the sunshine state upon announcing the takeover plan. Such sentiment is perhaps unsurprising given the raft of hurdles to be surpassed before the acquisition can go ahead.
The takeover is subject to the approval of the Federal Treasurer and the Australian Competition and Consumer Commission (ACCC). Notably, it's also subject to amendments to Queensland's State Financial Institutions and Metway Merger Act 1996.
Suncorp has today committed to establishing a Disaster Response Centre of Excellence to monitor and respond to extreme weather and natural disasters in the state. It will also maintain its head office in Brisbane.
Meanwhile, ANZ promises there will be no job losses or branch closures from the takeover for three years following its completion.
It will also allocate $15 billion of new lending to support Queensland-based renewable energy projects and green Olympic Games infrastructure, and $10 billion of new lending for Queensland energy projects over the next decade. Finally, the big bank has promised $10 billion of lending for Queensland businesses over the next three years.
