Diversified financial services firm IOOF Holdings (ASX: IFL) has reported underlying earnings of approximately $51 million, an increase of 5% on the prior year. These results include contributions from the recently acquired DKN Financial and Plan B financial planning businesses. Management also provided guidance on the expected synergies from the Plan B acquisition, which is forecast to reach $10 million per annum.
Recently there have been a number of market commentators suggesting the mid-tier financial services space is ripe for further consolidation. Given the level of synergies that can be extracted from consolidation, for example IOOF’s Plan B acquisition, and the general rise in levels of funds under management (FUM), it wouldn’t be at all surprising to see more merger and acquisition (M&A) activity.
Just last week Equity Trustees (ASX: EQT) made a play for Trust Company (ASX: TRU) with an all-script offer which valued Trust Company at $5.28 per share, based on closing prices pre-announcement. Meanwhile, WHK Group (ASX: WHG) has released its interim results, and taken the opportunity to update the market on the approach from SFG Australia (ASX: SFW) in relation to a potential merger. As SFG highlights in its market release, management believes that significant opportunities to capture synergies and unlock value for shareholders are possible through a merger of the two companies.
With the financial services sector enjoying a resurgence, Treasury Group (ASX: TRG) and Perpetual (ASX: PPT) are two names that have in recent times been mentioned as both potential acquirers or acquires.
The financial services sector is home to a number of quality companies with strong balance sheets and maintainable dividends. There is also the potential for shareholders to benefit from synergies through acquiring a competitor or receiving a takeover premium for their stock should a suitor come along.
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