NAB announces agreement to sell MLC Wealth to IOOF

By Edil Corneille

The National Australia Bank (NAB) has today entered into a Sale and Purchase Agreement to sell 100 percent of MLC Wealth (MLC) to IOOF Holdings for a purchase price of $1,440 million. The agreement follows the strategic decision announced by the bank in 2018 to pursue an exit of MLC and is in line with NAB’s strategy to simplify and focus on its core banking business while creating a stronger future for MLC.

“We have a clear plan and we are getting on with it. The sale of MLC will enable NAB to prioritise investment and focus on executing our refreshed strategy of delivering simpler, more streamlined products and processes for our customers and colleagues,” NAB Group CEO Ross McEwan apprised.

“NAB has taken a disciplined approach over the past two years to transform the business and prepare it for exit. Significant work has been done by MLC CEO Geoff Lloyd and his executive team to modernise and strengthen the MLC business and remediate customers.

“We have explored a range of transaction options and are confident this sale provides the best outcome for NAB shareholders and for MLC stakeholders. We recognise the specialised nature of wealth management and the opportunity for the MLC business as part of IOOF.

“Consolidation has the potential to deliver significant benefits for clients and members, including scale and reducing costs, complexity and risks. The combined business is expected to be a highly competitive, advice-led retail wealth manager,” he said.

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The purchase price of $1,440 million represents a multiple of 17.3x MLC’s cash earnings of approximately $83 million and comprises $1,240 million in cash proceeds from IOOF and $200 million in the form of a 5-year structured subordinated note in IOOF, that will provide NAB with the opportunity to participate in the potential value created through the combination of MLC and IOOF over the medium term. In addition, NAB is expected to receive approximately $220 million of surplus cash from MLC in the form of a pre-completion dividend.

The transaction includes MLC’s advice, platforms, superannuation & investments, and asset management businesses. The bank will retain legal ownership of MLC’s advice entities, for the purpose of completing advice-related remediation programs. Other assets of the advice entities and related employees of the advice business will be transferred to IOOF as part of the transaction. MLC’s aligned advisers will be provided with an opportunity to transfer to IOOF’s licenses at the completion of the transaction.

NAB will continue to offer targeted wealth management products and services through JBWere and nabtrade. Completion of the transaction is subject to certain conditions, including regulatory approvals from APRA and ACCC. Subject to the timing of regulatory approvals, completion is expected to occur before the middle of the calendar year 2021.