Yellow Brick Road (ASX:YBR) shareholders have voted in favour of the acquisition of 204,803 shares in privately-owned Vow Financial Holdings from Macquarie Bank (ASX:MQG) for 4,959,158 YBR shares priced at $0.70 each.
This is part of the company’s acquisition of Vow, one of Australia’s largest mortgage aggregators, which is expected to be earnings accretive.
YBR has already secured 100% acceptance of its offer.
Shareholders have also approved the issue of shares under its share placement and as consideration to shareholders of Vow and privately-owned mortgage manager and originator RESI Mortgage Corporation.
This consists of:
- A placement of up to 60,071,429 ordinary shares priced at $0.70 to current major shareholders and institutional fund managers to raise $42.05 million to help fund the cash portion of the RESI acquisition;
- The issue of 9,267,240 ordinary shares to shareholders of Vow as part consideration for its acquisition; and
- The issue of 7,857,144 ordinary shares to RESI shareholders as part consideration for its acquisition.
Acquisitions
The acquisition of Vow Financial Holdings and RESI Mortgage Corporation fit into YBR's growth strategy to build the business through acquisitions.
Their acquisition builds its lending portfolio which in turn builds revenues, increase margins and market position.
Analysis
Acquiring both Vow and RESI is a key step in achieving Yellow Brick Road’s aspiration of becoming a leader in the ‘non-bank’ sector.
These provides significant opportunities for Yellow Brick Road to build revenues, increase margins and gain market position as an alternative to the big 4 banks in Australia.
Proactive Investors continues to rate Yellow Brick Road as one of our top picks for 2014/15. We maintain our share price target of $0.73 to $0.97 in 2014.
This is close becoming reality with shares in the company currently trading at $0.70.
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