Deals - Asia

Australia's IOOF Holdings to pick ANZ pension assets cheaper, shares jump

(Reuters) - Australia's IOOF Holdings IFL.AX said on Thursday it agreed on a cheaper purchase price for Australia and New Zealand Banking Group's ANZ.AX pension assets, giving its shareholders another reason to rejoice after a landmark court case win last month.

ANZ cut the asking price for OnePath assets by 13% to A$825 million ($560.01 million), citing “changing market conditions” after an inquiry last year turned up the regulatory heat on Australia’s financial institutions while a protracted U.S.-China trade war roiled global financial markets.

IOOF, among the worst affected by the Royal Commission inquiry, posted a sharp fall in annual profit in August after compensating aggrieved customers.

However, the company won a high-profile case last month against the banking watchdog, which failed to prove that the Australian wealth manager had breached pension laws.

The ruling was the first in a case that originated directly from last year’s probe into the financial sector and had sent the company’s shares sharply higher.

The IOOF stock, which rose 11% to a 10-month high on Thursday, has added over 30% so far this year - a heady reversal from last year’s wipeout that came on the heels of the inquiry.

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“It certainly is a rosier picture (for IOOF) compared with what it was not quite so long ago,” said James Tao, a market analyst at CommSec.

“The success of the case against regulators and now the fact that they managed to bag the ANZ deal in a better shape than what was expected before has provided IOOF with a much better picture,” Tao added.

Buying the pension assets would help IOOF gain a bigger foothold in the market, Tao said.

In a separate statement, ANZ said it expected the deal to close in during the first quarter of 2020 after the trustees of OnePath and the bank gave the deal a green light.

While merger-and-acquisition deals often face roadblocks, delays in the OnePath sale - announced late-2017 and earlier expected to close the following March - implied the strong impact the Royal Commission was having on the country’s top lenders’ decision making.

“Despite a challenging operating environment for wealth management, the strategic rationale for the transaction remains compelling and we continue to be confident in the significant benefits it will deliver,” ANZ said.

Additional reporting By Aby Jose Koilparambil in Bengaluru; Editing by Christian Schmollinger and Sherry Jacob-Phillips