What Happened to the IOOF Holdings Share Price?
Shares in diversified financial services provider IOOF Holdings Ltd [ASX:IFL] have gained nearly 1.5% today, outperforming a sluggish broader market. The stock has risen off a nine-month low to close at $8.25 per share.
Why Did this Happen to the IFL Share Price?
IOOF has been on the acquisition hunt for several years now. Today it announced its latest target, SFG Australia Ltd [ASX:SFW].
IOOF has been keen to boost its total funds under advice, and bringing SFG under its wing is expected to create the third-largest advice business in Australia and one of the largest wealth management businesses listed on the Australian Stock Exchange.
IOOF will pay SFG shareholders the equivalent of around 90 cents per share. That’s nearly 25% more than what SFG shares were worth before the deal was announced. Even with that premium, the market is calling this a good deal for IOOF… which is why its share price has risen.
What Now IOOF Holdings?
IOOF shareholders should be glad to see this kind of proactive behaviour from their company’s management. SFG is a solid business. When it’s integrated with IOOF, shareholders of the combined group should reap the benefits of scale.
You should remember, though, that although this deal is unanimously recommended by the directors of both IOOF and SFG, its completion is subject to an SFG shareholder vote… so there could be some twists in the tale to come.
Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
