TIDMMTW
RNS Number : 7398F
Mattioli Woods PLC
11 March 2020
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
11 March 2020
Mattioli Woods plc
("Mattioli Woods", "the Company" or "the Group")
Acquisition of Hurley Partners Limited
Mattioli Woods plc (AIM: MTW.L), the specialist wealth
management and employee benefits business, is pleased to announce
it has entered into a binding agreement to acquire 100% of the
issued share capital of Hurley Partners Limited ("Hurley"), the
private client adviser and asset management business with offices
in London, Surrey and Manchester, from its shareholders ("the
Sellers") ("the Acquisition").
Highlights
-- Hurley is an established wealth management business with
specialist pension expertise and discretionary investment
management offering.
-- Total consideration of up to GBP25.6 million comprising
upfront consideration of GBP10.6 million in cash and GBP7.0 million
in new ordinary shares in Mattioli Woods (" Consideration Shares"),
plus c ontingent consideration of up to GBP8.0 million payable in
cash in the two years following completion, dependant on Hurley
meeting and outperforming forecast earnings;
-- Compelling rationale, as the Acquisition, inter alia, is a
high quality opportunity that extends the Group's geographic
footprint into Surrey, adds direct equity investment expertise to
the Group's existing discretionary management proposition and adds
experienced advisers to the Group's consultancy team; and
-- The Acquisition is expected to be earnings enhancing in the first full year of ownership.
Consideration
The total consideration of up to GBP25.6 million comprises:
-- Initial consideration of GBP17.6 million of which GBP10.6
million will be paid in cash and GBP7.0 million in Consideration
Shares, equating to 842,866 shares;
-- Contingent consideration of up to GBP6.0 million payable in
cash split in equal amounts between the first and second
anniversaries of completion, subject to certain financial targets
being met based on forecast earnings before interest, tax,
depreciation and amortisation ("EBITDA") generated during that
period; and
-- Additional contingent consideration of up to GBP2.0 million
payable in cash split in equal amounts between the first and second
anniversaries of completion, subject to outperformance on the
financial targets based on forecast EBITDA generated during that
period.
Completion is subject to regulatory approval and expected to
take place in the second quarter of 2020.
Transaction overview
-- Founded in 2013, Hurley is an established wealth management
business with specialist pension expertise and a discretionary
investment management offering.
-- Hurley has circa GBP570 million of client assets, comprising approximately:
- GBP380 million of discretionary funds under management;
- GBP50 million of non-discretionary assets; and
- GBP140 million of other pension assets.
-- Hurley provides advice and administration to approximately
320 client family groups, including specialist pension advice on
over 330 SSAS and SIPPs, with a proven track record in attracting
new funds under management.
-- Hurley enjoys a strong regional presence operating from three
offices in London, Surrey and Manchester. The business employs 33
staff and Hurley's experienced management team will be retained by
Mattioli Woods following the Acquisition, with clear succession
plans in place.
-- The Acquisition has a compelling strategic rationale:
- In line with the Group's strategy to explore high quality
acquisition opportunities, alongside our continuing focus on
organic growth;
- Extends the Group's geographic footprint into Surrey and adds
scale to its existing London and Manchester operations;
- Adds direct equity investment expertise to the Group's
existing discretionary management proposition;
- Adds nine advisers to the Group's consultancy team; and
- The migration of the SSAS portfolio onto Mattioli Woods'
proprietary pension administration platform offers potential
operational efficiencies.
-- In the year ended 30 April 2019, Hurley generated revenues of
GBP5.68 million with a profit before taxation of GBP0.75 million.
At 30 April 2019 Hurley's gross assets were GBP3.30 million and net
assets were GBP2.62 million.
-- Material financial benefits are expected from the
Acquisition, which is expected to be earnings enhancing in the
first full year of ownership:
- Annual cost savings of approximately GBP0.5m expected to be
fully realised by the end of the first year; and
- Opportunity to realise revenue synergies through a new
distribution channel for Mattioli Woods' services.
Payment of the initial cash consideration, deal costs and
completion price adjustment is expected to result in an estimated
cash outflow at completion, net of cash to be acquired, of GBP8.9
million.
Admission of Consideration Shares
To satisfy the GBP7.0 million of share consideration, 842,866
Consideration Shares will be issued at a price of 830.5 pence per
share at completion. Application will be made to AIM for the
admission of the Consideration Shares to trading ("Admission").
Admission of the Consideration Shares, which will rank parri passu
in all respects with Mattioli Woods' existing shares in issue, is
expected to become effective on completion following regulatory
approval.
The Sellers will enter into a lock-in deed with Mattioli Woods
and its nominated adviser and broker, Canaccord Genuity Limited,
restricting sales of the Consideration Shares during the two years
following completion.
Commenting on the Acquisition, Ian Mattioli, Chief Executive
Officer of Mattioli Woods, said:
"This exciting acquisition is an important step forward for
Mattioli Woods, as we continue to expand our operations. Our
discussions with the management team have confirmed the strong
cultural fit and our common approach to looking after clients,
where the strategy of growing the enlarged Group with the client
always in mind clearly resonates.
"Hurley Partners serves a similar client base to Mattioli Woods,
with the many complementary elements between our businesses
enhancing our specialist pension knowledge, discretionary portfolio
management and financial planning propositions. We believe the
range of products and services that Mattioli Woods has to offer can
support the excellent outcomes from which Hurley's clients already
benefit. In addition, there are cost savings to be realised from
combining our operations in London and Manchester.
"The Hurley team has a proven ability to win high quality new
business and the transaction gives us an exciting new distribution
channel for Mattioli Woods' services. Acting with integrity and
treating clients as we would wish to be treated ourselves are
central to our culture and key to maintaining the long-term
multi-generational client relationships that will deliver value for
all stakeholders.
"The Acquisition provides a long term, value-accretive
opportunity for the Group, despite the broader challenges the
market is currently experiencing. Like Mattioli Woods, part of
Hurley's revenues are fee-based, rather than being linked to the
value of assets under management, administration or advice , giving
our combined business a revenue profile that is less sensitive to
market performance. Our profit outlook for the year remains in line
with management's expectations and I believe this transaction will
strengthen our position in a market that is continuing to
consolidate".
Tony Hurley, Chairman of Hurley Partners Limited, added:
"This is a highly positive development for everyone associated
with Hurley Partners and especially our clients and employees.
Putting clients at the heart of everything we do is central to
Hurley Partners' culture and we recognise the commitment of
Mattioli Woods to this principle. Clients will notice no difference
in our approach, which has been built on personal service and clear
communication alongside our knowledge and expertise. I am delighted
to confirm that all of the employees of Hurley Partners will be
remaining with the newly combined group and will continue to
operate from our existing locations. The highest level of
commitment of all directors and staff remains unaltered. We look
forward to working together as part of a strong and progressive
wealth management group".
- Ends -
For further information please contact:
Mattioli Woods plc
Ian Mattioli MBE, Chief Executive Tel: +44 (0) 116 240 8700
Officer
Nathan Imlach, Chief Financial www.mattioliwoods.com
Officer
Canaccord Genuity Limited (Nominated Advisor
and Joint Broker)
Sunil Duggal
David Tyrrell Tel: +44 (0) 20 7523
8000
Tom Diehl www.canaccordgenuity.com
N+1 Singer (Joint Broker)
Justin McKeegan, Corporate Finance Tel: +44 (0) 20 7496 3000
Tom Salvesen, Corporate Broking www.n1singer.com
Fenchurch Advisory Partners
(Financial adviser to Hurley Partners Limited)
Graham Marchant, Senior Managing Director Tel: +44 (0) 20 7382
2222
www.fenchurchadvisory.com
Media enquiries:
Camarco
Ed Gascoigne-Pees Tel: +44 (0) 20 3757 4984
www.camarco.com
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END
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