The biggest single in-bound acquisition in New Zealand corporate history had to overcome numerous obstacles before going ahead, including complex regulatory and competition issues in New Zealand; concerns about the loss of an iconic New Zealand brand to Australia; a difficult due diligence and complex rating agency issues.
ANZ acquired NBNZ from Lloyds TSB for cash – the biggest cash acquisition by an Australian firm – at an attractive price, with the purchase price representing a multiple of 11.2 times last 12 months (LTM) cash earnings. This compares with an average of 14.6 times LTM cash earnings in precedent-setting previous Australian and New Zealand banking transactions.
The transaction funding, involving a rights issue and hybrid capital issue, ensured that ANZ maintains strong capital ratios. Both Standard & Poor’s and Moody’s have since reaffirmed ANZ’s AA-/Aa3 rating.
