The ACCC yesterday gave the green light to Perpetual’s acquisition of The Trust Company (TRU), but there were conditions attached.
Perpetual has acquiesced to the corporate watchdog’s request to divest TRU’s existing 13.4 per cent stake in competitor Equity Trustees.
Equity Trustees itself has made a number of unsuccessful offers for TRU this year.
IOOF, which launched a surprising last-ditch bid for TRU at the beginning of September, has revealed it will purchase the 13.4 per cent stake in Equity Trustees should the Perpetual acquisition go ahead.
IOOF managing director Christopher Kelaher said the purchase of the Equity Trustee shareholding would be a “strategic investment in a business we understand extremely well”.
“We see this as a long-term holding that will provide IOOF with greater exposure to the Australian trustee industry,” he said.
As part of its bid on September 3, Mr Kelaher said he was surprised Perpetual had bid for TRU given the “ACCC issues”.
At the time, IOOF pointed out that the acquisition of TRU would take Perpetual from $263.9 billion in funds under supervision (FUS) to $367.1 billion – effectively seeing the largest player in the trust market purchasing the second largest.
For its part, the ACCC said in its decision yesterday that the Perpetual/TRU merger was “unlikely to lead to a substantial lessening of competition in the relevant market” – subject to the divestment of the Equity Trustees shareholding.
ACCC chairman Rod Sims said the merged entity would be constrained by continued competition from other existing suppliers as well as the threat of entry into the market by new competitors.
The expansion of existing competitors would also act as a check on the merged entity, said Mr Sims – as well as the “countervailing power of many corporate customers, who are able to provide some of the relevant services in-house or sponsor new entry if they are unhappy with price or service levels”.
