Business finance broker Consolidated Operations Group is furthering its strategy of adding in-house finance products to complement its distribution capability, with the announcement of a merger with SME finance company CML Group.
The companies have entered into a scheme implementation agreement. CML shareholders will have the option of taking COG shares or a mix of cash and COG shares.
The offer values CML at A$111.4 million. In addition to the scheme consideration, CML will pay a dividend immediately prior to the scheme implementation.
COG claims to be the country’s biggest equipment finance broker, with a 17 per cent share. It also offers car finance, operating leasing, premium funding, invoice discounting and insurance broking.
It has a network of 117 employed brokers and 4988 brokers using its aggregation service.
It has a $97 million receivables book, made up predominantly of equipment leases.
CML offers invoice finance, equipment finance and trade finance. Earlier this month, it announced the acquisition of Classic Funding Group, giving it a significant increase in funding capacity.
It currently has $125 million of equipment finance advances and is turning over $500 million in invoice discounting and $1.5 billion in invoice factoring.
Both companies are going to the market to raise equity: $20.2 million in COG’s case and $14.5 million for CML. Proceeds will be used to pay costs of the merger, reduce debt and provide working capital.
The merged company will eventually be re-named.
Based on 2018/19 financials, the merged business has revenue of $264.9 million, EBITDA of $50.3 million and net profit of $17.4 million (COG contributing $7.9 million of NPAT and CML $9.5 million).
COG chief executive Andrew Bennett will be the CEO of the merged group. CML Group CEO Daniel Riley will take on a new role as executive director.
The CML merger is the latest in a long list of acquisitions COG has made in recent years. Since 2015 it has acquired Platform, a finance broker; 50 per cent of Linx, an equipment finance, insurance and mortgage broker; 80 per cent of Consolidated Finance Group, a finance aggregator; and 32 per cent of Westlawn, a finance company.