IOOF bid signals M&A return

The Trust Company now is the subject of three competing takeover offers, the latest from IOOF

If ever there was an indication that the stockmarket was looking healthier, it is with the recent uptick in capital raisings and acquisitions.

Duet’s (DUE) raising was snapped up overnight and this morning, yet another bid for the Trust Company (TRU) has lobbed, this time from IOOF (IFL).

It is the third bid for the Trust Company in recent months with Equity Trustee being trumped by a $220 million offer from Perpetual, which now has been outbid by IOOF.

IOOF claims its offer, which will deliver a potential $6.73 in value to Trust Co shareholders – a 42% premium to the Trust shares immediately prior to the announcement – is vastly superior to Perpetual’s $6.06.

Given both offers incorporate a share component, the values fluctuate.

Both Perpetual and IOOF have noticed the hefty margins and earnings stability the trust operations deliver, reducing the reliance on more volatile equity markets.

The Trust Co has enormous expertise and market share in custody, responsible entity and superannuation services and delivers around $1.3 billion in funds under management in a financial services industry ripe for consolidation.

IOOF reckons a successful purchase of the Trust Co would strengthen its “cradle to grave” wealth management proposition in a deal that will be earnings positive in year one.