- REA Group (REA) has entered into a scheme of implementation agreement to fully acquire Mortgage Choice (MOC)
- A company subsidiary will acquire all Mortgage Choice shares for $1.95 cash each, valuing the transaction at roughly $244 million
- If approved by shareholders, the acquisition will be implemented by the end of June 2021
- REA Group is down 1.62 per cent and trading at $137.79 per share
- Mortgage Choice is up a whopping 62.55 per cent and trading at $1.91 per share
REA Group (REA) has entered into a scheme of implementation agreement to fully acquire Mortgage Choice (MOC).
Mortgage Choice is an Australian mortgage-broking business, consisting of over 500 brokers, 380 franchises and more than 30 lending partners. During the last six months of 2020, the ASX-listed company reported $22.2 million in net revenue and $4.1 million in net profit after tax.
Under the binding scheme agreement, a wholly owned subsidiary of REA Group will acquire all shares in Mortgage Choice, in exchange for $1.95 each in cash. This values the proposed acquisition transaction at approximately $244 million.
This transaction is likely to be funded by an increase in REA Group’s syndicated debt facilities. The company’s current $170 million syndicated debt facility is due to expire in December 2021, but is now expected to be partially refinanced in order to facilitate the acquisition.
REA Group’s CEO, Owen Wilson, commented on the company’s proposed absorption of Mortgage Choice.
“The acquisition of Mortgage Choice represents an exciting opportunity for REA to create a leading broking business,” he said.
“It builds on our success to date, accelerating our financial services strategy while leveraging our existing strengths and capabilities,” he added.
The proposed acquisition is subject to a number of conditions, including approval from the Mortgage Choice Board, the Courts, and the Foreign Investment Review Board. Mortgage Choice’s Board of Directors has already unanimously recommended that its shareholders vote in favour of the scheme — in the absence of a superior proposal.
If approved, REA Group’s acquisition of Mortgage Choice should be implemented by the end of June 2021.
REA Group is down 1.62 per cent, trading at $137.79 per share at 2:10 pm AEDT.
Mortgage Choice is up a whopping 62.55 per cent, trading at $1.91 per share at 2:11 pm AEDT.