IOOF (ASX: IFL) has made a friendly takeover offer for Plan B (ASX: PLB) and Plan B directors have recommended shareholders accept the all-cash offer.
IOOF is paying $49.1 million cash which is $0.60 per share for Plan B and the takeover is to be fully funded via a bank loan on normal commercial terms.
The acquirer is one of Australia's largest wealth management and financial services groups with approximately 1,000 advisers and $110.2 billion in funds under management, administration, advice and supervision (or 'FUMAS') as of March 2012.
Commenting on the acquisition, IOOF's Managing Director Christopher Kelaher said "The acquisition of Plan B represents a unique opportunity to combine two highly complementary businesses. The recent market volatility has illustrated the importance of size and scale in terms of competitive position. This transaction gives IOOF greater representation in the fastest growing markets in Australia and importantly provides access to the New Zealand retirement savings market for the first time."
IOOF has made a number of takeovers and has a strong history in cost containment while executing and integrating acquisitions and should continue to generate profits provided that the market does not suffer a major downturn. IOOF is considered to be is a well-managed company with a conservative balance sheet and good cash flow. In the first half of this financial year, it announced a fully franked dividend of $0.19 per share.
Wealth managers such as AMP (ASX: AMP), Perpetual (ASX: PPT) and Treasury Group (ASX: TRG) benefit from Australia's compulsory superannuation system. While super contributions are to rise from 9% to 12% in the coming years, the dynamics of the industry may change with the banning of upfront and trail commissions and the need to offer a low fee MySuper product Investors will need to choose their investments in this sector carefully.
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Motley Fool contributor Tony Reardon owns shares in AMP. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
