The competition watchdog is reviewing the proposed merger between AFG and Connective, with stakeholders invited to submit their feedback.
In August, the Australian Finance Group (AFG) announced plans to acquire the assets and liabilities of Connective Group to create a significant national mortgage distribution network, with more than 6,575 brokers and combined mortgage settlements of $76 billion in FY19.
Under the transaction, Connective will receive $60 million in cash and 30,886,441 AFG shares.
This values the acquisition at $120 million.
However, the transaction is conditional upon court approval as well as approval from shareholders, the Australian Competition and Consumer Commission (ACCC), and other relevant parties.
Accordingly, as part of the approval process, the ACCC is seeking stakeholder views on the proposed acquisition.
The ACCC’s investigation is focused on the impact of the proposed acquisition on competition in the supply of mortgage distribution services.
In particular, the ACCC is seeking feedback on:
Submissions on the proposed merger are to be lodged by 5pm on 14 November 2019.
Subject to satisfaction of the conditions, the acquisition is expected to be completed in the second half of FY20.
The aggregators have noted that if approved, the two brands will remain separate and retain their own identities, with the day-to-day running of the businesses remaining much as they are now (for example, with AFG retaining its FLEX CRM system, and Connective retaining Mercury), along with the same executive management team.
However, Connective CEO and founding shareholder Glenn Lees will be offered the opportunity to join the board of AFG upon completion of the transaction.
It is not expected that brokers would experience a change in their current arrangements with their aggregator head, and it is expected that lender BDMs would also largely stay the same.
[Related: AFG to merge with Connective]
Charbel Kadib is the news editor on The Adviser and Mortgage Business.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.
Brokers are driving competition in the mortgages sector and chang...
An SME lender has raised $25 million in equity to fund the ‘rap...
The weekly round-up of the biggest news stories from across Momen...