IOOF Holdings (IOOF) and Australian Wealth Management (AWM) have announced they will merge to form an $88 billion financial services firm.
The new entity is to be named IOOF, with the merger planned for April 2009.
IOOF shareholders will own approximately 30 per cent of the combined group, with AWM shareholders owning 70 per cent.
"Combined, the group will have the capacity to provide an expanded range of products and services and greater benefits for all key stakeholders, including advisers, clients, customers and shareholders," IOOF managing director Tony Robinson said.
"Because the two businesses are so similar, this merger can be achieved with very low risk and should result in our shares becoming more liquid, and allow the merged business better access to opportunities."
The group will have an Australia-wide distribution network of more than 580 aligned financial advisers. It will offer services including advice, distribution, funds management, administration, trustee services and asset management.
The merger will not have any impact on the operations of Perennial Investment Partners, which will remain a wholly-owned subsidiary of IOOF Holdings, or the Perennial boutiques.
The boards of both companies unanimously recommended the merger, which is expected to generate post-tax synergies of $20 million in the first year.
AWM shareholders will be asked to vote on the merger in March or April next year.
Based on current prices, market capitalisation of the merged group would be $700 million.
Following the merger in April, AWM managing director Chris Kelaher will succeed Robinson as managing director and chief executive officer of the new entity.
The merger will be achieved through a scheme of arrangement, with IOOF issuing one IOOF share for every 3.73 AWM shares.
