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Mercer grabs Pillar from NSW for $35 million

Treasurer Gladys Berejiklian is the favourite to replace Mike Baird as Premier.

Treasurer Gladys Berejiklian is the favourite to replace Mike Baird as Premier. Photo:AAP

Superannuation group Mercer has bought super administrator Pillar from the NSW Government for $35 million.

The move alleviates concerns raised by the Australian Competition and Consumer Commission that a potential sale of Pillar to the sector’s largest provider, Link Administration Holdings, would have bloated costs for fund members.

The ACCC argued that the proposed sale would substantially lessen competition but was not due to make a final call till December 15.

NSW appears to have not wanted to take the risk on a negative finding in giving Mercer the go ahead. But the sale price is a step down from earlier price estimates of $100 million.

The deal establishes Mercer as one of the largest providers of super services in the country by boosting the funds it administers to over $100 billion and doubling its member account base to more than two million.

Mercer managing director and Pacific market chief Ben Walsh said the acquisition demonstrates the firm’s plans to build its market position.

“We know many super funds are seeking a proactive and sustainable business partner who can provide superior administration and related services, reduce costs and help funds get closer to members.”

“For this reason we have invested heavily in our people capability, process innovation and technologies to ensure we are ready for these opportunities,” Mr Walsh said.

Mercer’s larger actuarial and investment consulting business,which includes the $20 billion Mercer Super Trust, will create  “Pillar’s people opportunities for professional growth and development,” Mr Walsh said.

NSW Treasurer Gladys Berejiklian said Mercer was committed to its service base in the Illawarra and the jobs it creates there.

“Pillar is a major employer in the Illawarra – that is why the government has secured the commitment of Mercer to maintain and ideally grow Pillar’s operations in the region for at least 10 years,” Ms Berejiklian said.

Illawarra jobs are safe in the sale. Photo. AAP

Illawarra jobs are safe in the sale. Photo. AAP

The sale will boost the NSW government balance sheet and eliminate the need for ongoing capital injections into the business, she said.

“Ongoing public ownership of Pillar was not in the interests of Pillar’s clients, staff or NSW taxpayers. Mercer is better placed to invest in Pillar to ensure it continues to meet the needs of its superannuation clients and members.”

Mercer has a strong track record of acquisitions in the super services area including Cullen Egan Dell and Sedgwick and Mellon.

Link, which had earlier lodged a binding proposal to acquire Pillar, said it was disappointed with the result but remains active in considering other opportunities for growth.

“The ACCC is concerned that the possible acquisition is likely to substantially lessen competition in the supply of superannuation administration services by entrenching Link’s dominant position, resulting in lower service levels or higher prices, which will ultimately be passed on to fund members,” ACCC chief Rod Sims said when the Link proposal was floated.

The Illawarra, which includes Wollongong and surrounds, has been hard hit by manufacturing and mining job losses in recent times.

 

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