IOOF spruiks benefits of $1.44bn acquisition of MLC

IOOF has made a pitch to the competition regulator on its $1.44bn purchase of wealth business MLC, touting “significant benefits” from the buy.

IOOF chief executive Renato Mota. The ACCC on Monday called for submissions on the IOOF acquisition of MLC to be made by November 11. Picture: Stuart McEvoy

Suitor IOOF has made a pitch to the competition regulator on its $1.44bn purchase of wealth business MLC, touting “significant benefits” from the acquisition.

IOOF on Monday said it had lodged a submission with the Australian Competition & Consumer Commission to coincide with the beginning of an informal merger review.

In late August, IOOF agreed to buy National Australia Bank’s wealth arm, MLC, as part of a plan to become the nation’s largest financial advice business.

The deal is subject to approval by the ACCC and the banking regulator.

The ACCC on Monday called for submissions on the IOOF acquisition of MLC to be made by November 11 and has proposed February 4 as the date to announce its findings on the merger review.

That can be either the regulator’s final decision or a statement of issues, that requires further input from the merger parties and interested industry players.

In a letter to interested parties and stakeholders on Monday, the ACCC said it was focused on “the impact of the proposed acquisition on competition in the supply of investment platforms for superannuation and other retirement income, retail investment platforms for non-superannuation discretionary investment (wealth management), and financial advice”.

It highlighted an interest in gauging views on how closely IOOF and MLC compete, and how the tie-up may impact fees or service levels in areas of overlap or the supply of financial advice.

IOOF’s ASX statement on Monday said it believed members, investors and advisers would benefit from the MLC deal and committed to providing information to the ACCC for its review. It said the regulator’s timeline didn’t change its expectation of closing the MLC purchase before June next year.

But IOOF’s share price remains well below the $4.26 level it was trading at ahead of the deal’s announcement as some investors questioned the transformational nature of buying MLC and the integration task ahead. IOOF’s shares closed at $3.21 on Monday.

IOOF will not assume any remediation liabilities for MLC’s advice business that occur before the completion of the deal.