Australian wealth manager Netwealth confirmed it made a A$785m (£430m, $586m, €506m) offer to acquire all the issued shares in platform giant Praemium.
But, according to an Australian Stock Exchange (ASX) statement on 2 November 2021, Praemium’s board quickly rebuffed the bid and said that the proposal “does not appropriately value” the platform’s “current performance and near-term trajectory”.
Netwealth said in a separate ASX statement that the deal will bolster its platform and “accelerate” its growth plans in the wealth management market.
If a deal is reached, the combined group would be the “largest independent wealth management platform in Australia”. The enlarged group would have around A$72bn funds under management and more than A$22bn in non-custodial assets.
Matt Heine, joint managing director of Netwealth, said: “Netwealth is confident that the proposed transaction would create a very strong value proposition for existing and future clients and for shareholders of both groups.
“Praemium shareholders would have meaningful equity in the combined group and benefit alongside Netwealth shareholders from the strategic benefits as well as the cost and revenue synergies that would arise from the merger.”
Finances
The proposal consists of one company share for every 11.96 shares of Praemium, which is approximately A$1.50 a share. This equates to an equity value of A$785m.
Praemium said: “The board has taken time to carefully consider the proposal, alongside financial and legal advice and has unanimously concluded that the proposal undervalues Praemium’s business and is not in the best interests of Praemium shareholders.
“The Praemium board remains focused on delivering value for shareholders. As a strong, rapidly growing independent player in the platform and funds administration industry, Praemium is in a unique position.
“The board is open to engagement at an appropriate valuation but is mindful that any proposals put forward should appropriately reflect Praemium’s market position and growth potential as well as recent activity in the sector.”
International sale
This offer comes several months after the Australia-headquartered platform provider decided, following a strategic review, to sell its international operation.
Praemium said in July 2021, the board believes that “an alternative owner would better realise the full potential of the international opportunity”.
International Adviser contacted Praemium about whether Netwealth’s interest in its Australia operation was a potential trigger for the strategic review of its international arm. But the firm did not reply in time for publication.
The platform also made a c-suite change alongside the review of the international operation.
In August 2021, Praemium appointed Anthony Wamsteker as chief executive. He had held the role of executive director and interim chief executive since May 2021, when former boss Michael Ohanessian left the company after almost 10 years in the role.
