Both Netwealth Group Ltd (ASX: NWL) and Praemium Ltd (ASX: PPS) share prices are monitored today after Netwealth proposed a merger of the two companies.
In addition, shareholders of Praemium received over $ 50 million in net proceeds from the sales process of Praemium’s international operations.
The transaction implies a valuation of $ 1.50 per share for Praemium and represents a premium of 29% on the closing price of the share .
From an enterprise value (EV) perspective, the transaction values Praemium at $ 775 million and an EV / EBITDA multiple of 55 excluding international sales.
The acquisition would result in $ 72 billion in funds under Administration (FUA) and cementing Netwealth’s position as the largest independent platform.
The combined group would hold $ 22 billion in undocumented assets. Additionally, anyone would be able to leverage relationships with existing advisors and customer bases.
The transaction will accelerate Netwealth’s strategy towards non-custody services through Praemium’s industry-leading portfolio reporting and management.
« Netwealth believes that a merger with Praemium would build on the respective strengths of both companies to strengthen the combined group’s position as the fastest growing wealth management platform in the Australian market. » In response to the proposed merger, the board came « Unanimously concluded that the proposal is undervalued Praemium’s business and not in the best interests of Praemium’s shareholders » does not adequately reflect this sector.
Praemium has always been a logical goal for Netweal te as the company is looking to expand into undisclosed assets.
Another logical candidate is Hub24 Ltd (ASX: HUB). Given that the now known premium is up for grabs, Hub can place a competing bid.
Unsurprisingly, Praemium declines the first offer. It’s a fair deal, but probably not enough takeover premium to warrant further board engagement.
I anticipate Netwealth will increase its offering in the near future to try to close this deal.
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Netwealth Group Ltd (ASX: NWL) and Praemium Ltd (ASX: PPS) share prices are monitored today after Netwealth proposes to merge the two companies.
Goodman Group’s (ASX: GMG) share price is up more than 4% after the real estate group released its quarterly update on September 2021.
I think this 2nd ASX growth stocks could be good buys in November 2021, including the Pushpay Holdings Ltd (ASX: PPH) donation business.
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