Deutsche Bank's decision to sell BT Funds Management is likely to trigger off a fierce bidding war which will strengthen the case for keeping the business intact, BT executive vice-president Myles Baron-Hay says.
The chance for a business to acquire BT represents an unequalled opportunity for someone to take control of what is arguably one of the best brands in the market, and to pick up dominant market positions in Australia and New Zealand. The extension of this equation is better economies of scale, lower costs, and a price tag of $1 billion-plus.
Baron-Hay says a fierce bidding war augurs well for BT's future.
He reasons that, assuming, a buyer pays a huge premium for BT based on its brand, its people and its distinctive investment style then it would make little sense for the new owner to make major changes.
"The successful buyer will have outbid others and paid a premium for the brand and people. Having paid for that it wouldn't make sense to undermine that by unwinding (the business)."
Baron-Hay also says having a new owner is probably a better fit for the business. Under the current scenario Deutsche Bank brought BT for its United States operations, and the Australasian and Asian businesses were an added benefit.
A new owner "would really want us", he says, while to Deutsche BT was an inherited asset.
Currently market speculation has the hot money on BNZ parent company National Australia Bank (NAB) as the new owner, however other Australian banks are also thought to be eager to acquire.
NAB is favoured because of its size, and the fact it has a war chest already. Also NAB is understood to be keen on developing its funds management business and having a suite of brands.
The large life insurers such as AMP, Colonial and National Mutual are in contention as well, however price may be an issue for them. The third possibility is for an American/European firm wanting to set up a beachhead in the Australasian market. Going against this scenario would be the need to rebrand BT.
Baron-Hay says although Deutsche's announcement, last week, that it was selling the business was a surprise and contrary to previous announcements it made sense.
The Deutsche/BT integration committee found there were a number of regulatory and branding hurdles working against its earlier strategy. Also, Deutsche was buying BT for its Northern Hemisphere assets, not those downunder and in Asia.
Those issues, tied together with the fact that it had received unsolicited offers for BT in Australia and New Zealand, brought about a change of strategy.
Deutsche's $17 billion takeover offer for BT worldwide was launched in November and is due to settle by the end of May. The Australian and New Zealand sale is expected to be completed within a couple of months.
Deutsche Bank's decision to sell BT Funds Management is likely to trigger off a fierce bidding war which will strengthen the case for keeping the business intact, BT executive vice-president Myles Baron-Hay says.