AFG to merge with mortgage aggregator Connective
Australian Finance Group Ltd will merge with the mortgage aggregation business Connective Group Pty Ltd, according to their official website.
The partnership will create a "momentous national mortgage distribution network", with more than 6,575 brokers and $76 billion in combined mortgage settlements this financial year.
Connective Group Pty Ltd will reportedly receive $60 million in cash, and 30,886,441 AFG shares, as part of the agreement, with AFG to fund the bulk of the cash component through a new corporate debt facility.
The merged business will have a significant national footprint in Australia’s $1.8 trillion home loan market.
"The expanded distribution channel and broader diversification of products the combined group can supply will provide greater choice for both brokers and consumers," according to AFG Chairman Tony Gill.
Connective CEO Glenn Lees said "the coming together of the Connective and AFG teams is a natural fit".
While bound by a binding conditional implementation deed entered into by both parties, the agreement remains conditional until a court validates the legality of the transaction.
Official approval from both company’s shareholders, and from the Australian Competition and Consumer Commission (ACCC), are also required before the merge can be executed.
AFG expects the merge to be completed in the second half of FY2020 (between June and September next year).
AFG has indicated their intent to "keep the market informed of progress of satisfaction of the conditions precedent to the transaction in accordance with its ASX continuous disclosure obligations".
Law firm Norton Rose Fulbright advised Connective Group on the deal valued at $120 million.
The team was led by corporate M&A partner Jasmine Sprange, restructuring partner Alex Mufford and special counsel Bernie Walrut, and was supported by special counsel Sarah Chen, senior associate Oliver Kabongo and associates Michael Phillips and Liya Wu, with specialist support from partners including Belinda Harvey.