Tolhurst acquires Community & Corporate Financial Services
Independent Australian stockbroking and financial services group, Tolhurst Group Limited (Tolhurst), has proposed an acquisition of long-established independent financial planning group, Community & Corporate Financial Services (ComCorp) by which it has accelerated its strategy to becomes a full-service financial services house.
ComCorp currently has $1.7bn of funds under advice and management and forecast revenues for the 2008 financial year in excess of $12m. The acquisition price of ComCorp is expected to be approximately $39m, subject to ComCorp’s aggregate earnings performance in the 2008 and 2009 financial years and ComCorp’s Advisers and Credit Union participation.
Tolhurst has signed a non-binding Term Sheet which sets out the terms under which it intends to purchase 100% of the issued capital of ComCorp, conditional upon:
Completion of due diligence;
Agreement on an integrated business plan for the 2008 financial year;
Agreement on and signing of formal transaction documentation;
Key executives signing Executive Service Agreements; and
Approval of the transaction by ComCorp and Tolhurst shareholders at respective General Meetings.
On completion of the transaction, the Tolhurst Board will extend an invitation to Allyn Chant, the current Executive Vice Chairman of ComCorp, to join the Tolhurst Board. Chant a Chartered Accountant was the founder of ComCorp and was previously an internal auditor specialising in finance and investments with MIM Holdings Limited.
It is intended that 50% of the acquisition price will be satisfied by a cash payment, funded by way of borrowings and cash reserves, and 50% of the acquisition price would be satisfied through the issue of new fully paid ordinary shares in Tolhurst at an issue price of 50 cents per share.
The new shares would be issued in three tranches over a three year period and would be subject to escrow arrangements, future earnings performance hurdles and personnel retention requirements. The issue of these new shares will require the approval of Tolhurst shareholders at a General Meeting.
Subject to all conditions being met, the effective date of control by Tolhurst is expected to be 1 July 2007 and the transaction is expected to settle on 31 July 2007.
ComCorp is Brisbane based and has offices throughout the major capitals and regional areas of eastern Australia from Cairns to Melbourne. The ComCorp group is owned by its Directors, Advisers and Credit Unions. ComCorp has a network of quality advisers and enjoys better and unique relationships with several large member-based organisations such as credit unions and industry superannuation funds.
ComCorp serves 11 member-based organisations with more than 600,000 members and currently is in discussions with a number of other organisations that would increase that reach to in excess of 1m members.
The proposed acquisition reflects Tolhurst’s strategic vision to further expand its geographical presence on the east coast of Australia and strengthen its wealth management activities. The acquisition is consistent with Tolhurst’s strategic objective of growing and diversifying its revenue base and increasing cash Earnings per Share. The acquisition is expected to be cash Earnings per Share accretive in the first year.
Tolhurst has already signed an agreement to acquire InterFinancial Holdings, a corporate advisory and investment banking group. The proposed acquisition of ComCorp is a further significant step in the Tolhurst expansion and diversification strategy.
14-Jun-2007