Goldfields Money offers $60m merger proposal
(Friday, 24 November 2017 8:52AM – https://thewest.com.au/business/goldfields-money-offers-60m-merger-proposal-ng-b88670038z )
Goldfields Money has offered up a $60 million merger proposal with one of the country’s fastest-growing mortgage wholesalers as the alternative to Firstmac’s hostile cash takeover bid.
Under a preliminary agreement finalised late yesterday, Sydney-based Finsure would emerge with 63 per cent of the expanded Goldfields Money by taking an issue of 40.7 million shares valued at $1.50 each.
Subject to Firstmac extending its offer, Goldfields shareholders would have to decide whether to accept its $1.27-a-share cash on-market bid or gamble on the Finsure merger generating better long-term value.
The valuation of $1.50 a share put on Goldfields Money by the proposal is in excess of the $1.27 to $1.39 range put on the target by its independent expert and would value the merged company at $97.5 million.
Goldfields Money said it was a superior proposal to Firstmac’s bid and would generate substantial value for shareholders, improving its scale, revenues and growth opportunities. But the agreement comes with some uncertainty.
Finsure and Goldfields Money have struck only a “process agreement” that provides for them to undertake due diligence with a view to signing a binding merger implementation deal by December 22.
Also, any tie-up still has to be approved by Federal Treasurer Scott Morrison as dictated by the Financial Sector (Shareholdings) Act.
Firstmac, Goldfields Money’s biggest shareholder with 14.9 per cent, has already secured approvals for its proposed takeover of the former credit union. However, its offer has struggled for acceptances, with Goldfields Money’s shares trading above the bid and the target’s board adamant that Firstmac is undervaluing the company’s banking, or Australian Deposit-taking Institution, licence.
Wholesalers such as Finsure, which is controlled by another major Goldfields Money shareholder, financial services group Aura, link banks and other lenders with mortgage and finance brokers. Set up in 2011, it has a network of 1200 loan writers and manages $26 billion of loans.
Goldfields Money is a banking minnow, with just $183 million of loans under management and deposits of $194 million as at June 30. However, its value for Finsure and Firstmac lies in controlling its ADI licence.
Chief executive Simon Lyons said the Finsure merger would “allow our shareholders to stay in touch and benefit from what we think is going to be really high-growth business”.
“It’s not a controlling transaction as such, because the board remains the same and the ADI operates as it does now,” he said.
The announcement came after Goldfields Money shares closed 1¢ lower at $1.30.