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CML drops COG merger, looks to Scottish Pacific

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Annie Kane 7 minute read

In a new turn of events, debtor finance specialist CML Group has terminated its agreement with Consolidated Operations Group following an alleged “material breach” of terms, and has instead entered into a binding implementation deed with Scottish Pacific.

While ASX-listed CML Group – the parent company of Cashflow Finance – last year entered into a scheme implementation agreement with Australia’s largest equipment finance broking company, Consolidated Operations Group (COG), it has now been revealed that the agreement has been terminated and a competing deal from Scottish Pacific is instead moving forward.

CML Group has announced that it has entered into a binding Scheme Implementation Deed with business finance company Scottish Pacific Group Limited (Scottish Pacific), in a deal which would see Scottish Pacific acquire 100 per cent of the issued share capital of CML for a 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).

Termination of COG deal


According to CML Group, the decision to terminate the agreement with COG was made after COG acquired a relevant interest in 17.36 per cent of the issued voting shares in debtor finance specialist CML Group in January 2020, which the group alleges constitutes a “material breach by COG”, alongside “other matters”.

Further, CML Group has noted that the offer put forward by COG was lower than that of Scottish Pacific (and the broking company had no intention to increase its proposed consideration to shareholders).

As such, CML Group has revealed that the scheme that was proposed with COG will no longer proceed and is now asking COG to pay a $500,000 break fee. 

The group is therefore now applying to the courts to cancel the scheme meeting in respect of the scheme with COG. 

In an update to ASX, COG said that it is “considering the validity of the notice and will keep the market informed with respect to its proposed course of action”.


Consolidated Operations had previously warned that the Scottish Pacific offer would result in a takeover that couldraise serious competition issues that may lead to investigation of the proposed merger of CML and ScotPac by the Australian competition regulator”.

The broking company also previously highlighted that its offer would enable CML shareholders to have the opportunity to continue as shareholders in the new group, whereas the Scottish Pacific proposal would pay CML shareholders “cash only and will not be given the opportunity to participate in any upside as a result of the merger.”

Scottish Pacific offer now moving forward

The CML board is now unanimously recommending that CML shareholders vote in favour of the Scottish Pacific acquisition, in the absence of a superior proposal (and subject to an independent expert, appointed by CML, finding that the scheme with Scottish Pacific is in the best interests of CML shareholders). 

The first court hearing in relation to the Scottish Pacific agreement is now scheduled for April and – subject to timing of receipt of regulatory and shareholder approval – could become effective by May 2020.

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

More to come.

[Related: Scottish Pacific looks to buy CML Group]

CML drops COG merger, looks to Scottish Pacific
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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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