The plug has been pulled on a merger that would have created one of the biggest funds management groups in Australasia.
National Mutual Holdings and Lend Lease Corporation (which owns MLC) announced today that they have abandoned their plans to merge their life insurance and funds management businesses.
The merged businesses would have had more than A$51 billion in assets under management.
The firms said they couldn't agree on a structure for the new entity.
The two companies said the problems with the merger related to what would happen in the event that one party wished to exit the joint venture, as well as the resolution of conflicts and the extent of control each shareholder should have over the National Mutual/MLC vehicle.
Under the now canned proposals National Mutual would have controlled 51 per cent of the joint venture and Lend Lease 49 per cent.
'Resolution is unlikely to be achieved," they said in a joint statement. They will now "focus entirely on their existing and evolving businesses and not be distracted by protracted negotiations, which now appear to have little certainty of resolution."
Shares in both these companies fell once the announcement was made as many investors had already factored in the merger benefits of the merged group.
The announcement is a bit of a bombshell as Lend Lease's David Clarke said a week ago that the merger was on track to be approved this month.
While back in January, when the joint venture was publicly sketched out, the companies said: "the merger makes absolute sense in an increasingly competitive marketplace". National Mutual chairman Dean Wills expanded on the importance of the merger saying, "we cannot overestimate the strategic importance of this proposed merger."
The combined company would have had more than 21 percent of Australia's managed funds, about equal to the current market leader, AMP Ltd.
It was expected to lift annual profits by a third to A$500 million over the next four years, buoyed by at least A$200 million in cost savings.
The plug has been pulled on a merger that would have created one of the biggest funds management groups in Australasia.