Micro-cap ($32m) financial advice business Diverger (ASX:DVR) has launched $64m cash-scrip takeover bid for rival micro-cap ($43m) Centrepoint Alliance (ASX: CAF) which if successful will create a circa $100m entity that will benefit from much greater operational scale.
Diverger is pitching its offer at 32.5 cents per Centrepoint share, a 30% premium to the target’s last close price at 22 June.
Centrepoint’s shareholders can opt to either receive the offer price of 32.5 cents in cash or shares in Diverger as part of an evenly split 'mix and match' facility.
The default consideration offered to shareholders comprises a 16.25 cents per share in cash consideration and 16.25 cents per share in Diverger scrip consideration.
It’s understood that Diverger enters the bid for Centrepoint with a 19.99% pre-bid interest, obtained via a call option with major Centrepoint shareholder Thorney Group.
Diverger's management expects the combined entity to benefit from a significantly strengthened market leading position.
As a well as benefitting from greater operational scale - with services being provided to an advisor footprint of more than 1400 advisors post completion – the planned merger is also expected to offer a platform for enhanced market liquidity for both organisations.
“Diverger looks forward to working collaboratively with the Centrepoint Alliance Board to undertake due diligence and execute binding transaction documents in an efficient manner to provide Centrepoint Alliance shareholders with a high degree of certainty, limited conditionality and minimal execution risk,” Diverger noted.
To the uninitiated, the HUB24-backed (31% stake) Diverger (formerly Easton Investments) provides services to financial advisers and accountants, including back-office support to AFSL licencees and dealer groups.
Centrepoint also offers a similar range of services.
Diverger advised the market that a potential combined group would have:
A significantly strengthened market-leading position
Greater operational scale
Services being provided to an adviser footprint of 1,400-plus advisers
Expended core client services
The indicative proposal remains subject to due diligence and regulatory and board approval.
As part of the indicative proposal, Diverger notes it has no issues with the Centrepoint board declaring a dividend of up to $0.02 per share (Permitted Dividend) provided that a minimum cash balance of $8m is available at completion.
Meantime, Centrepoint entered a trading halt this morning, and is expected to resume trading on Tuesday 28 June when a decision on the Diverger bid is expected to be announced.
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