Are ANZ shares still a buy after its Suncorp roadblock?

ANZ Group Holdings Ltd (ASX: ANZ) was dealt a blow last week when the Australian Competition and Consumer Commission (ACCC) blocked the company’s proposed acquisition of the banking operations of Suncorp Group Ltd (ASX: SUN).

The ACCC’s Deputy Chair, Mick Keogh, revealed that he wasn’t convinced that the acquisition would not substantially lessen competition in the supply of home loans nationally, small to medium enterprise banking in Queensland, and agribusiness banking in Queensland.

However, ANZ is not taking no for an answer and looks set to refer the ACCC’s decision to the Australian Competition Tribunal.

Suncorp’s chair, Christine McLoughlin, appears to believe the Tribunal will see the merits in the transaction and overturn the ACCC’s decision. She said:

When we embarked on this transaction, we were of the firm belief it was in the best interests of our customers, shareholders and employees and that it would provide a net benefit to the Australian economy.

Together with external economic and industry experts, we determined that this deal would not adversely impact the competitive dynamics in the markets in which we operate. There is nothing we’ve seen throughout the ACCC process that has caused us to change our view on these matters and we believe the Tribunal will accept the merits of our case.

ANZ also appears confident that the Tribunal will see things from its point of view. So much so, the bank “continues its preparations for the integration of Suncorp Bank into ANZ.”

Goldman Sachs has been running the rule over the ACCC’s decision and hasn’t let it dim its bullish view on ANZ’s shares.

That’s despite acknowledging that the ACCC appears to be wanting Suncorp Bank to merge with rival Bendigo and Adelaide Bank Ltd (ASX: BEN) instead. It said:

We note that the ACCC, based on their review process, considers that a merger between SUN Bank and BEN remains a realistic prospect with better competition outcomes.

The good news, though, is that we won’t have too long to wait for an end to this saga. Goldman explains:

We understand that ANZ will have 21 days to apply to the tribunal after which the tribunal will have 90 days to review the application and make a decision with potential for an additional 90-day extension. Subject to approvals, SUN noted that completion is expected by the middle of CY24.

If there’s no extension, then a decision could be made before the end of the year.

Are ANZ shares a buy?

Despite this blow, Goldman has retained its conviction buy rating and $27.38 price target on the company’s shares. This implies a potential upside of 8.5% from current levels.

The broker also expects 6.4% dividend yields both this year and next. This boosts the potential 12-month return to almost 15%.