Mortgage Choice stock price pops 60pc on merger deal with ASX property giant REA
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The offer is for $1.95 per share, a substantial 66 per cent premium to Mortgage Choice’s closing share price of $1.18 last Friday.
MOC, 18.5 per cent owned by the Commonwealth Bank, says that its directors have unanimously recommended the sale to shareholders, who incidentally, are still eligible to receive the interim 4 cents dividend announced in February.
The MOC share price jumped by more than 60 per cent today after the announcement to $1.90, just shy of the offer price.
The acquisition will marry the biggest property lister in Australia, REA, with MOC’s fast growing $54 billion loan book – which REA’s chairman Hamish McLennan calls a “strong cultural alignment”.
MOC has more than 500 brokers and 380 franchises across the country, partenering with 30 lenders. It reported a net revenue of $22 million and NPAT of $4.1 million for last half.
For REA, the merger aims to align REA’s digital expertise with a leading mortgage broking business, which the company hopes to scale up faster.
REA is the leading property advertiser in Australia, and is the operator of realestate.com.au. The website has a substantial lead over its competitor domain.com.au.
The company has also made strategic acquistions in the past, buying websites such as flatmates.com and move.com in the US.
In the latest half, the company delivered a 13 per cent increase in NPAT to $172 million.
Details of the scheme will be sent to its shareholders in May, with voting expected to be some time in June.
It will be subject to the usual financing and shareholder approvals, and if successful, will be completed by end of June.
There is a break clause penalty of $2.4 million payable by both sides in the event of certain customary circumstances.
Including today’s surge, the MOC share price has risen by more than 170 per cent in the last 12 months, while the REA stock price is up by 70 per cent over the same period.