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Scottish Pacific looks to buy CML Group

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Annie Kane 8 minute read

SME lender Scottish Pacific has submitted a proposal to acquire non-bank debtor finance specialist CML Group, competing against a merger deal from Consolidated Operations Group.

ASX-listed CML Group – the parent company of Cashflow Finance – has announced that it has received an unsolicited non-binding indicative and conditional offer from Scottish Pacific Group Ltd (ScotPac) to acquire 100 per cent of the issued share capital of CML.

The offer is for total cash consideration of $0.60 per share, comprising $0.57 cash per share and permitting a fully franked dividend of $0.03 per share to be paid prior to completion. 

Given that there are currently 217.57 million shares currently issued, this would equate to approximately $130.5 million*.


However, the ScotPac offer is subject to a number of assumptions and conditions (including completion of satisfactory confirmatory due diligence).

The deal comes hot on the heels of an announcement from Australia’s largest equipment finance broking company and the debtor finance specialist, Consolidated Operations Group (COG), that it was looking to acquire all of the issued share capital of CML Group as part of a merger deal.

Under the COG offer, which is subject to court and CML shareholder approval, CML shareholders would have the option to elect to receive 100 per cent of the scheme consideration in COG shares or receive a mixture of cash (at $0.24 per share) and COG shares. 

According to CML, COG has already been informed of the ScotPac offer and has “no current intention to increase the proposed consideration to be offered to CML shareholders” to match the ScotPac offer.

CML doesn’t recommend ScotPac offer


CML Group has advised shareholders that there is no certainty that the indicative ScotPac proposal will result in a binding offer and is recommending that shareholders take no action in relation to the indicative ScotPac proposal at this point in time. 

It added that it intends to continue to pursue the COG scheme of arrangement, stating that it believes the COG deal “remains, presently, the best available transaction for shareholders”.

“The CML board continues its recommendation of the COG transaction in the absence of a superior proposal capable of acceptance by shareholders. In the event that the indicative ScotPac proposal does not result in a binding offer, it is the company’s intention to complete the COG scheme of arrangement,” it said. 

CML has informed the financial services regulator of the ScotPac offer and is seeking to proceed with the first court hearing for the scheme of arrangement on Friday (20 December), subject to ASIC finalising its review of the scheme booklet.

Should ASIC complete its review before Friday, then COG and CML will seek for the first court hearing to proceed and the intended date of the CML scheme meeting would be 29 January 2020. If the review is not completed, then the hearing will be adjourned to a later date to be advised.

Due to the summer recess, the next available court hearing may not be available until early February.

CML said it would make a further announcement about the ScotPac proposal in due course and will keep the market updated as to further material developments. 

Deal could raise ‘serious competition issue’: COG

COG also noted the offer, emphasising that the deal is subject to conditions, and believes such a takeover would “raise serious competition issues that may lead to investigation of the proposed merger of CML and ScotPac by the Australian competition regulator that has the potential to delay any transaction between CML and ScotPac for a number of months”.

Given that the board of CML has recommended that shareholders take no action in relation to the ScotPac proposal, COG has said it remains “committed to pursuing its merger with CML”.

“COG continues to believe that the merger with CML has the potential to unlock greater shareholder value than currently exists,” it said in a statement.

“Under the binding COG offer, CML shareholders have the opportunity to continue as shareholders in a significant new group in the financial services marketplace, whereas under the indicative ScotPac proposal, should it become a binding offer capable of acceptance, CML shareholders will be paid cash only and will not be given the opportunity to participate in any upside as a result of the merger.”

COG went on to state that it also believes that there is substantial uncertainty that any merger of CML and ScotPac could occur without significant regulatory scrutiny, which could jeopardise execution of any proposed transaction.

COG chief executive Andrew Bennett said: “The notification of this non-binding and indicative proposal from Scottish Pacific does not change anything. It is not a proposal that is capable of being accepted by CML shareholders. If a binding offer was to be received, there is no guarantee that it would be a superior proposal to the COG proposal since COG believes that there is the potential for execution risk due to regulatory hurdles that would need to be navigated.” 

“COG remains committed to its merger with CML to create a significant new group in the financial services marketplace focusing on the needs of the SME sector. 

“The ability for COG and CML to leverage each other’s platforms following the merger remains compelling and, we believe, is in the best interests of CML shareholders who will continue to be involved in the merged group through COG’s scrip consideration offered under the scheme,” he said.

Scottish Pacific has not yet issued a comment on the matter.

*This story was upated on 20/12/2019 to correct the number of CML Group shares available and the resulting valuation.

[Related: Consolidated Operations and CML Group to merge]

Scottish Pacific looks to buy CML Group
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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.



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