The IOOF Holdings Limited (ASX: IFL) share price is on the move this morning.
At the time of writing, the financial services company's shares are up 1.5% to $3.59.
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Why is the IOOF share price climbing?
Investors have been buying IOOF's shares following the release of an announcement after the market close yesterday.
That announcement reveals that the company's "transformational" acquisition of the MLC business from National Australia Bank Ltd (ASX: NAB) is progressing well.
The agreement to acquire MLC for $1,440 million, which was announced in August 2020, was subject to the satisfaction of certain conditions precedent. One of those conditions was the receipt of approval from the Australian Prudential Regulation Authority (APRA).
According to the release, this approval has been granted, which means all regulatory approvals have now been received.
IOOF's CEO, Renato Mota, commented: "APRA's approval satisfies the final regulatory condition precedent necessary to complete the acquisition of MLC. Central to our engagement with APRA was demonstrating how IOOF's strategic intent will deliver improved member outcomes."
"This transformational acquisition will create one of the industry's largest advice-led wealth management organisations. MLC will deliver a step change in our scale and reach, providing substantial benefits to our clients, members and ultimately our shareholders. We look forward to continuing to challenge ourselves to deliver accessible, affordable and sustainable advice-led wealth management outcomes for the benefit of all Australians," he concluded.
The two parties expect the deal to close by the end of the month.
How is IOOF funding the acquisition?
The good news is that the funds for the acquisition are already in place. This follows the completion of an equity raising in September that raised approximately $1,043.8 million.
Though, it is worth noting that the equity raising wasn't a huge success. In fact, retail shareholders took up just 2.8 million shares out of ~88 million shares made available to them through a retail entitlement offer.
This left the underwriters with a significant number of shares to dispose of. Which may explain why the IOOF share price has underperformed materially since the announcement of the acquisition.
When the IOOF share price went into a trading halt prior to the announcement, it was fetching $4.51. This means the current IOOF share price is a disappointing 20% lower that this level today.
