IOOF will aim to retain the majority of existing DKN employees and offer retainers to senior executives if a proposed takeover of the group goes ahead, although certain positions may become redundant, according to a proposed scheme of arrangement released to the Australian Securities Exchange.
Subject to a review of the DKN business, IOOF said it intends to retain the majority of existing employees that support the Lonsdale dealer group and DKN wealth management practice joint ventures, and where relevant, relocate those employees to IOOF’s head office.
However, IOOF also said it expected some corporate, managerial and operational duplication between the businesses, and as such, certain positions may become redundant – although the extent of this would not be known until after a review was completed.
IOOF also said it has agreed to make a retention payment of $180,000 and issue 100,000 IOOF employee options to DKN director and chief executive Phil Butterworth. IOOF would also make retention payments and issue IOOF employee options with an exercise price of $7.50 to DKN senior executives Andrew Rutter, Mario Modica and Ken Costas, if the scheme becomes effective.
The total of all such executive retention payments is approximately $335,000 in cash with 200,000 IOOF employee options, with those payments aimed to ensure continuity of service for up to two years following the scheme implementation date, IOOF stated.
IOOF stated the business of DKN business will continue in substantially the same manner as it is presently, with no other redeployment of the fixed assets of DKN.
The proposed merger comes as part of a stated intention by IOOF to grow through vertical integration, and the opportunity to cross-sell products to an enlarged distribution network.
The proposed acquisition should add strength and depth to IOOF’s distribution network, broaden DKN’s product offering and accelerate the growth of DKN’s business under IOOF’s larger vertically integrated wealth management model; and create more efficient operations by leveraging IOOF’s capital and scale to implement change, IOOF stated.
Shareholders are to vote on the scheme proposal on 27 September, 2011.
