Australian fund manager IOOF Holdingshas signed an agreement to acuire SFG Australia (SFW) for A$670 million (US$627 million).
As per the terms of the agreement, SFG investors will be offered 0.104 of an IOOF share for each SFGA share they hold, implying a value of 90¢ for their shares and will assume 22% ownership in the expanded IOOF business.
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In addition, IOOF has also offered a cash alternative, subject to a maximum cash component of $100 million in aggregate.
IOOF managing director Christopher Kelaher said that the agreement marks the continuation of company’s ongoing, long-term strategy of pursuing value accretive acquisitions.
"The addition of SFGA will increase IOOF’s Financial Advice and Distribution segment considerably. This segment currently accounts for 14% of our revenue which will rise to an expected 30% of revenue after the transaction," added Kelaher.
The proposed deal price represents a 24.6% premium to SFGA’s 90 day volume weighted average price to 15 May 2014.
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By GlobalDataSFGA managing director Tony Fenning: "This potential merger is another positive step in continuing our journey to be the best advice group in Australia and leveraging the scale of IOOF to continue to offer our clients the best advice together with our range of "best of breed" products and services to implement their requirements."
The merged entity will be the third largest advice business in Australia by Funds Under Advice (FUA), the company claimed.
Kelaher concluded: "It will be business as usual for SFGA’s clients. Under IOOF’s ownership there will be no changes to SFGA’s client facing brands, operating model and client proposition. I look forward to welcoming SFGA shareholders, advisers, accountants and employees to IOOF."
