Merger creates giant financial services company

The difficult environment for wealth managers has precipitated the merger between IOOF Holdings and Australian Wealth Management, creating a leading financial services company with more than $88 billion under management, advice and administration, it was

The difficult environment for wealth managers has precipitated the merger between IOOF Holdings and Australian Wealth Management, creating a leading financial services company with more than $88 billion under management, advice and administration, it was announced today.

Market capitalisation of the merged group, based on current prices, would be $700 million. The merger will be achieved through a scheme of arrangement whereby IOOF Holdings will issue one IOOF share for every 3.73 AWM shares. The boards of both companies unanimously recommend the merger, which is expected to generate post tax synergies of $20 million in the first year.

AWM shareholders will be asked to vote on the merger in March or April next year.

“In a difficult operating environment for wealth managers, we expect that the transaction will realise immediate value for both sets of shareholders and put the merged group in a very strong market position,” says AWM chairman, John Warburton.

The group will retain the name IOOF Holdings and remain at its Melbourne headquarters.

IOOF managing director Tony Robinson says that combined, the group will have the capacity to provide an expanded range of products and services and greater benefits for all key stakeholders, including advisers, clients, customers and shareholders.

“Because the two businesses are so similar, this merger can be achieved with very low risk and should result in our shares becoming more liquid and allow the merged business better access to opportunities.”

The group will have a distribution network with more than 580 aligned financial advisers across the nation and will offer services including advice, distribution, funds management, administration, trustee services and asset management.

Perennial Investment Partners will remain a wholly owned subsidiary of IOOF Holdings.