The IOOF Holdings Limited (ASX: IFL) share price is the best performer on the S&P/ASX 200 index on Thursday.
In morning trade the financial services company's shares have zoomed 9% higher to $6.95.
Why is the IOOF share price zooming higher today?
Investors have been fighting to get hold of IOOF's shares today after it provided an update on its acquisition of ANZ Wealth Pension and Investments business from Australia and New Zealand Banking Group (ASX: ANZ).
According to the release, ANZ has agreed a revised price of $850 million. This is a $125 million reduction from the original sale price of $975 million announced in October 2017.
The banking giant advised that the revised terms reflect changing market conditions and include lower overall warranty caps. There will also be some changes to the strategic alliance arrangements.
ANZ Group Executive Wealth, Alexis George, advised: "This sale remains consistent with our strategy to simplify our operations by focussing on retail and business banking in Australia and New Zealand, and Institutional Banking across the Asia Pacific region. While there has been a reduction in the sale price, there have been offsets included and it also provides certainty for our customers and staff."
IOOF's CEO, Renato Mota, appeared to be very pleased with the deal.
He said "The revised terms reflect both ANZ and IOOF's commitment to completing the transaction and it delivers greater certainty to ANZ P&I members and clients. Despite a challenging operating environment for wealth management, the strategic rationale for the transaction remains compelling and we continue to be confident in the significant benefits it will deliver."
"The transaction will meaningfully increase the scale and footprint of our core business as we continue to invest in delivery of member outcomes and execute our strategy to deliver accessible, advice-led wealth management for the benefit of all Australians," Mota added.
Approval from APRA remains a requirement for the transaction to complete. The regulator is considering the application, which was submitted earlier this month.
Subject to APRA approval, ANZ expects the transaction to complete in the first quarter of 2020. It is forecast to increase the bank's CET1 capital ratio by ~20 basis points.
Overall, I think this is a good deal for both parties and has the potential to make each company stronger.
