The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price went down 0.3% in August. That compares to a rise of 0.6% for the S&P/ASX 200 Index (ASX: XJO).
It's interesting when one of the main ASX blue chips goes down even though the index as a whole has gone up.
ANZ is one of the biggest four ASX bank shares in Australia, alongside Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).
The big bank didn't release its full-year result during reporting season – its financial calendar is for the 12 months to 30 September.
So, what happened?
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Completed retail capital raising
In July, ANZ announced that it was going to buy the banking division of Suncorp Group Ltd (ASX: SUN) for $4.9 billion.
To fund the deal, the big bank decided to raise $3.5 billion by issuing new shares through a fully underwritten pro-rata accelerated renounceable entitlement capital raising at a discounted ANZ share price. The institutional part of the offer raised gross proceeds of $1.7 billion and was completed on 20 July 2022.
ANZ announced that eligible retail shareholders subscribed for approximately 60.8 million new shares, raising around $1.15 billion. This represented a "strong" participation rate of roughly 64% of the new shares offered, according to ANZ.
The big bank then carried out a shortfall bookbuild, meaning it sold the 36.4 million shares that shareholders didn't take to other investors.
The bookbuild cleared at an ANZ share price of $23 per new share, representing a premium of $4.10 above the offer price of $18.90. The shareholders who didn't buy more shares will receive $4.10, less any withholding tax, for each new share sold in the bookbuild for their benefit.
Why is ANZ buying Suncorp's bank?
ANZ said the acquisition would make it a stronger and more balanced bank, increasing its geographic diversification by getting more exposure to Queensland.
At the time of the acquisition, ANZ pointed out that the deal included "$47 billion of home loans with strong risk profile, $45 billion in high-quality deposits and $11 billion in commercial loans". ANZ also said that the move was a "growth strategy" for the bank, and it would continue to invest in the regional bank.
The purchase price of $4.9 billion represents a price/earnings (p/e) ratio before synergies of 13.8x, or 9.3x after including the full run-rate of synergies. The expected annual cost synergies are around $260 million – approximately 35% of Suncorp Bank's FY22 reported cost base.
On a pro forma FY23 basis, it's expected to add to earnings per share (EPS) in the "low single" digits.
ANZ share price snapshot
Since the start of September, including today's early gain, ANZ shares are virtually flat.
