IOOF (ASX:IFL) accused of butchering its share price

The IOOF share price has risen by nearly 10% in the past five days' trading. Even after a contentious AGM questioning the price paid for MLC.

| More on:
asx company executive with multiple fingers all pointing at him

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

IOOF Holdings Limited (ASX: IFL) has faced a furious annual general meeting (AGM) today. Shareholders have accused the company of overpaying for its $1.44 billion MLC acquisition from National Australia Bank Ltd (ASX: NAB). The IOOF share price has fallen by 11.7% since the announcement of this deal on 31 August. Criticism to date has focused on the headline price paid for MLC. In particular, activist shareholder, Stephen Mayne, relentlessly accused the company of overpaying, highlighting the wealth destroying impact this can have. 

Mr. Mayne asked repeatedly who registered the 17% proxy vote against the acquisition. Nonetheless, IOOF chair, Allan Griffiths, would not be drawn on the issue. Instead deferring it until analysis could be undertaken. Surprisingly, the IOOF share price is up by nearly 3% today, at the time of writing. 

Another shareholder expressed his outrage, telling Mr. Griffiths "I vote against all resolutions, and will continue to do that as I think the handling of the MLC purchase was a disgrace." He went on to state "You have butchered the share price."

The growing rebellion in the ranks

A group was reported to be planning to vote against IOOF's provision of operating funds for MLC subsidiaries. As a result, the company saw protest votes on all resolutions including, in particular, the reappointment of two directors. Elizabeth Flynn, recorded a 24.8% vote against her. Meanwhile, John Selak saw a 17% vote opposing his re-appointment. 

Shareholders have expressed frustration over the price of and approach to the MLC deal. In particular, they believe the company used a COVID-19 waiver to issue 300 million additional shares on the basis of a non-COVID-related issue. However, an ASX spokesman responded that the rules were not limited to raisings under the health crisis. In addition, many critics are skeptical about claims by IOOF CEO, Renato Mota, that the MLC acquisition would add 20% to the company's earnings per share (EPS)

Stephen Mayne pointedly questioned the chair's competence to be running IOOF. Particularly as he has spent his career in unlisted financial services companies and has no additional directorships. He referred several times to the fall in the IOOF share price.

Mr. Griffiths pointed out he has only been chair for 18 months, during which time he had reset relationships with regulators, is implementing recommendations from the Hayne Royal Commission, and enjoys the full support of the board.

The falling IOOF share price

Since October 2017, the IOOF share price has fallen by over 60% during the heat of the Hayne Royal Commission. In the wake of the commission's findings Mr. Mota confirmed to a questioner that conflicts of interest were always front of mind. As the four large banks have divested themselves of wealth management assets in response to the royal commission, IOOF has capitalised on this opportunity to propel itself past its longtime rival AMP Ltd (ASX: AMP) with regard to its funds under management.

In year-to-date trading, the IOOF share price remains down by more than 47%.

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A young woman wearing overalls and a yellow t-shirt kicks one leg in the air showing excitement over the latest ASX 200 shares to hit 52-week highs
Share Gainers

Why Firefly, Kelsian, NAB, and Zip shares are roaring higher today

These shares are having a good time on hump day. Let's find out why.

Read more »

A man and woman sit at a desk staring intently at a laptop screen with papers next to them.
Opinions

Where I'd invest $5,000 in ASX 300 shares right now

These stocks look like excellent investments today.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Goldman Sachs says these ASX 200 stocks are strong buys

The broker is feeling very bullish about these stocks. But why?

Read more »

Business woman watching stocks and trends while thinking
Share Market News

5 things to watch on the ASX 200 on Wednesday

Here's what to expect on the local market today.

Read more »

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another tough day for investors this Tuesday.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why HMC Capital, Platinum, Sigma, and Skycity shares are dropping today

These shares are having a tough session on Tuesday. But why?

Read more »

A close-up photo of a ballot box with an Australian flag in front of it and a gentleman's hands placing his vote in the 2022 election inside the box
Share Market News

How these ASX 200 stocks are primed to gain from Labor's resounding Federal election win

With the Federal election in the rear-view, which ASX 200 stocks should I buy now?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Dimerix, Evolution Mining, Inghams, and NextDC shares are charging higher today

These shares are rising when many are falling today. But why?

Read more »