ANZ To Acquire Joint Venture Stake From ING For $1.9 Billion

Post by Sharat on September 25, 2009 · Under Business News, Capital Markets, Company News, Life Insurance, Mergers & Acquistions, Wealth Management, banking, insurance · Comment

Australian banking major Australia & New Zealand Banking Corporation (ANZ) will buy out its wealth management and life insurance joint venture partner ING in a transaction worth $1.9 billion.

According to a report in The Australian, ANZ requested a suspension of trading in its shares on Friday, pending a statement to the securities exchange.

The move was lauded by analysts, who feel that historically ANZ has not had enough scale in those businesses. It also frees up CEO Mike Smith’s ability to make further acquisitions in wealth management and life insurance, which under the terms of the original joint venture he was unable to pursue.

Dutch financial services firm ING later on Friday confirmed that it had agreed to sell its 51 per cent joint venture stake to ANZ for €1.1 billion ($1.9 billion) in cash, with the stake sale producing a profit of €300 million.

ANZ chief Smith in a statement said “Moving to full ownership of the wealth management and life insurance joint ventures significantly strengthens our position in wealth management with a business we know well. The transaction is consistent with our strategy.”

ANZ will pay from the acquisition with capital it already holds, after raising a significant war chest during the last year. The lenders closely watched tier one capital ratio will decline to 9.5 per cent after its purchase.

“Similar to the recent RBS Asia acquisition, ANZ has been able to take advantage of the global financial crisis and ANZ’s strong balance sheet to advance our strategy. The value proposition is also compelling with an attractive purchase price combined with significant revenue opportunities and selected cost synergies.” Mr. Smith said.

The Melbourne based lender said that the acquisition would contribute to earnings as early as next year, even before it had wrung out significant cost synergies.

In 2002 ING and ANZ merged their life insurance and wealth management operations, creating a joint venture which employs 2200 people in Australia and 500 people in New Zealand.

ANZ said the joint venture was the number three player in life insurance in Australia and ranked number five in retail fund management in Australia.

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