The merger of Australian Wealth Management (AWM) and IOOF has gained a significant thumbs-up from analysts who are today reporting to clients that the transaction promises to deliver some significant synergies.
According to Merrill Lynch, the merger represents a “strategically sound transaction”, adding “in our view, this transaction makes considerable strategic sense, as it would provide (1) significantly increased scale, (2) full vertical integration across the wealth management value chain, and (3) enhanced distribution”.
The analysis from Citi Group was equally positive, with its analysts suggesting there was strategic sense in a merger in circumstances where IOOF had been struggling for a while through lack of scale.
“Its merger with AWM should assist it here,” the analysis said.
The Citi analysis also suggested “distribution should be enhanced by the combination of Bridges and Consultum, while the merged company will have a stronger integrated model”.
Goldman Sachs JB Were pointed to the deal making sense in the context of “two sub-scale organisations in (roughly) the same space joining to form a larger organisation”.
