Commonwealth Bank of Australia (CBA) swooped on Count Financial, offering $373 million for the financial planning accountants network in a deal that will make CBA’s dealer group Australia’s second biggest.
CBA’s unsolicited cash offer came a day after Count announced it had more than doubled its annual profit in 2010/11 to $52 million, and the bank promised to keep it running as a stand-alone business.
The bank offered $1.40 per share, representing a valuation multiple of 14.6 times Count’s normalised net profit after tax of $25.6 million for the 12 months to June 30, 2011.
Shareholders can elect to receive CBA shares instead of a cash payout.
Count’s board had recommended the deal to shareholders, subject to an independent expert’s report in favour of the offer, Count’s founder and executive chairman Barry Lambert said.
Count’s shares spiked 35 per cent on the news and closed up 36 cents, or 33.96 per cent, at $1.42, a seven-month high.
Grahame Petersen, CBA’s group executive for wealth management, said the acquisition was complementary to Colonial First State’s advice businesses, and would boost the bank’s adviser numbers by 630 to 1,850, second in size to AMP’s dealer group.
“(The acquisition) provides us further access to the important and growing self managed super fund sector through a highly regarded network of accountant-based financial advisers,” he said.
For Mr Lambert, the bank’s promise to keep Count as a standalone unit, as well as the implications of the Future of Financial Advice (FOFA) reforms were key considerations in moving to sell the company which he founded 30 years ago.
He holds a 17.74 per cent stake in Count.
“The implications of the FOFA reforms have ended the level playing field for mid-sized firms and non-aligned advisory networks like Count.”
Uncertainty over the reforms meant Count could not become an acquirer in the current wave of industry consolidation, he added.
“CBA will also maintain and invest in Count’s highly respected brand and franchise, including retention arrangements for Count franchisees and staff.”
BT was likely to remain one of Count’s preferred platforms, he said.
CBA is a platform provider and lender to Count and Mr Lambert said the bank’s capital would help Count realise its growth ambitions.
But on a personal note, Mr Lambert admitted it was a sad day and he had “choked up driving across the bridge this morning knowing this was going to happen”.
If the deal proceeds, Mr Lambert will become non-executive chairman of Count.
Other Lambert family members hold in aggregate about 20 per cent of Count’s shares and indicated they would accept the offer in the absence of a superior bid.
The transaction is subject to approval from Australia’s competition regulator, and is expected to close by Christmas.
