CM – No deal: Praemium (ASX: PPS) rejects merger of Netwealth (ASX: NWL)

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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.

The information on this website is for general financial advice only. This means that the advice does not take into account your goals, your financial situation or your needs. For this reason, you should check that the advice is suitable for you and your needs before reacting to the information. In addition, you should obtain and read the Product Disclosure Statement (PDS) before deciding to purchase a financial product. If you do not know your needs, you should turn to a trusted and licensed financial advisor who can advise you personally on financial products. Please read our & Terms and Conditions and Financial Services Guide before using this website.

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