The IOOF Holdings Ltd (ASX: IFL) share price is up today after Australia's corporate watchdog announced that it would not oppose the proposed acquisition of MLC Wealth Management. At the time of writing, the IOOF share price is up 1.38% at $3.68.
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About today's decision
The Australian Competition and Consumer Commission (ACCC) has described IOOF and MLC as competitors in the supply of retail platforms for superannuation and other retirement income, and discretionary investments. The two companies also competed in providing corporate platforms for superannuation and other retirement income, financial advice for consumers and investment/asset management, the regulator found.
"Transactions that combine two major firms in a sector will attract close scrutiny from the ACCC," ACCC commissioner Stephen Ridgeway said. However, he added, "feedback from customers, financial advisors and other industry participants suggested that this deal would not be likely to substantially lessen competition".
The ACCC review indicated that post-acquisition, IOOF would still be competing with and constrained by several other large firms along with a number of smaller firms for the supply of retail platforms. The combined group would still only have a market share of approximately 10 per cent post-acquisition, and that the market would remain highly fragmented.
Mr Ridgeway said that "despite the profile and size of this transaction, it does not raise concerns under 50 of the Competition and Consumer Act largely due to the fragmented nature of most of the relevant markets and strong constraints form remaining competitors."
IOOF response
IOOF CEO Renato Mota welcomed the decision as a "key milestone in achieving approvals to complete the MLC acquisition".
Mr Mota said the MLC acquisition was highly complementary and a natural fit with IOOF. He views this as "a unique opportunity to create Australia's leading wealth manager" along with significant benefits through simplification and transformation for clients, members and shareholders.
The other regulatory approval required for the transaction to proceed is the receipt of s29HA approval to own or control an Registrable Superannuation Entities (RSE) license from the Australian Prudential Regulation Authority. At this point, IOOF does not expect any change to its stated estimated completion date of prior to 30 June 2021.
