February 25, 2013, 11:07 AM Merger Monday: WHK Group, SFG Eye...

February 25, 2013, 11:07 AM Merger Monday:
WHK Group, SFG Eye $782 Million Tie-Up
Article Comments Deal Journal Australia HOME PAGE »smaller

By Gillian Tan
The merger between financial advisory and wealth management businesses WHK Group and SFG Australia SFW.AU -0.83%to create an entity with a market value of around 760 million Australian dollars (US$782 million) has been welcomed by a major shareholder.

The all-scrip deal, as flagged by Deal Journal Australia, sees one SFG share worth 0.503 of a WHK Group share, implying a 14% premium to WHK’s closing price Friday of A$1.055 a share, or A$1.203. WHK Group said Monday its board hasn’t formed a view on the bid, and is evaluating it with the help of advisor Greenhill GHL +2.06%& Co.

Perpetual Smaller Companies portfolio manager Jack Collopy, who holds a 5.3% stake in WHK Group, told Deal Journal Australia earlier this month that most shareholders would support a merger that realized value equivalent to A$1.20 a share.

“We would support any deal that releases sufficient value for WHK shareholders,” Mr. Collopy added Monday, after WHK announced a first-half net profit of A$5.2 million.

“The result really demonstrated that the business is still in transition, potentially at near bottom-of-the-cycle activity levels and the full fruits of management’s restructuring and cost-cutting initiatives have yet to be seen,” he said.

SFG on Friday announced its acquisition of integrated accounting, wealth management and business advisory firm Lachlan Partners for A$23 million plus a further A$9.2 million if key milestones are hit.

“[There is a] greying of the lines between accounting and financial advice, with clients increasingly seeking these services from a single source,” Goldman Sachs GS +2.13%analyst Mike Younger said, describing the strategic rationale of the deal in a note to clients.

http://blogs.wsj.com/dealjournalaustralia/2013/02/25/merger-monday-whk-group-sfg-eye-782-million-tie-up/