Fund management giant Perpetual is favoured to get control of Trust Co, after its $250 million takeover bid was given the all-clear from the competition regulator.
But in approving the proposed takeover, the Australian Competition and Consumer Commission stipulated that Trust Co must dump its stake in small-cap financial services rival Equity Trustees.
IOOF will buy the Equity Trustees stake for $16.50 a share, or $19.7 million, if Perpetual's takeover offer is accepted. The prospect of IOOF nabbing a 13.4 per cent stake in Equity Trustees has heightened speculation that the acquisitive IOOF will make a bid for the entire company.
Shares in the previously low-key Trust Co have soared 65 per cent this year as Equity Trustees, Perpetual and IOOF seek growth through acquisition and further exposure to the attractive areas of philanthropy and self-managed superannuation.
IOOF and Equity Trustees still have offers on the table, but Perpetual's offer has the support of the Trust Co board.
Perpetual is the market leader in trustees services, with $260 billion of funds under supervision, then comes Trust Co with $103 billion, IOOF at $33 billion and Equity Trustees with $28 billion.
ACCC head Rod Sims said its discussions with customers of trust services found a degree of comfort with the proposed tie-up between Perpetual and Trust Co, particularly as the "people using these services are big players that can go in-house anyway".
There were "enough players generally and in segments in the market", Mr Sims said.
Citi analyst Nigel Pittaway said ACCC approval was likely, leaving Perpetual to finalise the acquisition in December, although he did not completely rule out another twist.
"Conceivably IOOF could still come back with a revised bid, but it would have to increase its estimate of available synergies above its previously stated $14 million which, while plausible, is unlikely."
But Deutsche Bank analysts Wassim Kisirwani and Dominic Rose did not rule out an improved offer from IOOF for Trust Co.
"We see the acquisition of Trust Co as the preferred outcome for IOOF, contingent on price. However, in the event that IOOF misses out on Trust Co, then an acquisition of Equity Trustee provides the company with a dominant stake in the number four player in the market."
IOOF managing director Chris Kelaher said IOOF was pleased to have the opportunity to acquire the shareholding in Equity Trustees.
"The purchase will provide us with a strategic investment in a business we understand extremely well," he said. "We see this as a long-term holding that will provide IOOF with greater exposure to the Australian trustee industry."
Equity Trustees, which has promoted its eight-month attempt for Trust Co by pointing to synergies, was described by Mr Pittaway as "likely to remain a distant player in the race for the Trust Company, having only extended (rather than revised) its offer days ago".