Financial advice firm Lighthouse has put Intrinsic's £42m cash offer to buy the firm to a shareholder vote
For the deal to go through it will require at least 75% of the shareholder value present at the meeting to vote in favour of the offer.
The acquisition, Lighthouse said, is expected to be effected through a Court-sanctioned scheme of an arrangement between the firm and Lighthouse Scheme Shareholders.
The firm added: "It is important that, for the Court Meeting, as many votes as possible are cast so that the court may be satisfied that there is a fair and reasonable representation of Lighthouse Scheme Shareholder opinion."
Shareholders who wish to have their say on the deal have until the morning of 8 May to complete their forms of proxy.
The deal, which has the backing of Lighthouse's executive and top three shareholders, would see Quilter and its advice arm Intrinsic grow to more than 3,900 financial advisers. Quilter offering £46.2m in total for Lighthouse but the advice network has £4m in excess cash on its balance sheet, so will in effect be paying £42.2m.
However, after the cash offer was revealed less than two weeks ago, Lighthouse shareholder Cavendish Asset Management argued the £42m offer was low "for a business with blue-chip clients and good growth potential".
Cavendish Asset Management fund manager Paul Mumford, who manages an AIM fund at the investment company, said: "Quilter's bid for Lighthouse does not adequately value what is a unique and strongly growing business.
"We fought off predatory bids in the past when the share price was down at about 3p. This time, though, there must plenty of other suitors interested in buying the company at a price that reflects the considerable growth potential from its list of blue chip clients, which is likely to grow."
Lighthouse is perhaps best known for its affinity services, which means it is the preferred provider of financial advice to 23 groups, including the likes of The Royal College of Nursing and British Airways Clubs, which have a total of six million members.
Lighthouse made a £2.5m profit in 2018 from £53.5m group revenues, citing the "levelling out" of defined benefit transfers and a correction in UK and global financial markets as the reasons underlying its fall in group revenue. It also transferred its auto-enrolment business to Smart Pension back in January.
The AIM-listed company said the acquisition offered its shareholders the opportunity to realise their investment in full and in cash at an "attractive premium" to the value it had been trading at over recent months.
Is the bid cheap?
Lighthouse made a £2.5m profit in 2018 from £53.5m of group revenues, citing the "levelling out" of defined benefit transfers and a correction in UK and global financial markets as the reasons underlying its fall in group revenue.
As well as the more usual advised clients, Lighthouse has 23 affinity contracts - meaning it is the preferred provider of financial advice to the likes of The Royal College of Nursing and British Airways Clubs - which have a total of six million members.
And, taking the basic multiple-of-revenue method for pricing a firm, paying less than 80% (£42m) for an advice firm with 400 advisers and more than £53m in group revenues looks like a great deal for Quilter.
Looking elsewhere, prolific consolidator AFH paid up to £7.7m - with an initial cash consideration of £3.2m - for Maidstone-based adviser Core Financial Services, which had annual revenues of £3.8m and nine advisers. This is an acquisition price of 80% to 190% of revenues, compared with Quilter's offer for Lighthouse of 80%.
Quilter's deal with Lighthouse also works out as about £100,000 per adviser, whereas AFH paid around £350,000 per adviser in that Core FS deal - and the latter figure is just the initial cash consideration.
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