Financial services firm CountPlus (ASX: CUP) has announced it will acquire 100% of Count Financial Limited from the Commonwealth Bank of Australia (ASX: CBA) in a $2.5 million deal which will house the entire Count network under the one roof.
The acquisition will be administered by CountPlus (which will hold 85% of Count Financial) and a special subsidiary of a discretionary trust established for the benefit of Count member firms known as CMFT (which will hold the remaining 15%).
When completed, the deal will bring the entire Count network together in one home to focus on the delivery of an accountant-led financial advice business model.
Today’s news follows CountPlus’ $2.48 million acquisition in April of a 40% interest in Melbourne-based Rundles Prime Pty Ltd and a 20% interest in Rundles Financial Planning Pty Ltd.
Under the terms of the acquisition, the Commonwealth Bank will continue to support and manage customer remediation matters arising from past issues at Count Financial, including after completion of the transaction.
It will also provide an indemnity amount of $200 million to CountPlus, representing a potential contingent liability of $56 million more than the $144 million made in earlier customer remediation provisions relating to Count Financial.
Commonwealth Bank currently owns a 35.9% shareholding in CountPlus which it said it would sell “in an orderly manner over time” following completion of the Count Financial transaction.
The acquisition of Count Financial will significantly enhance the scale and capability offered by CountPlus to the tune of an additional 359 financial advisers, 160 firms and $8.1 billion in total funds under administration.
CountPlus chief executive officer Matthew Rowe said it would move the company into a “clear leadership position” within Australia’s converged accounting and financial advice market.
“This is a truly transformational event,” he said.
“It will help us to significantly expand [our] national footprint, drive greater commercial and cultural synergies and deliver on an exciting growth trajectory which we believe will benefit our existing network, current Count Financial member firms and the long-term health of the combined businesses.”
Mr Rowe said the acquisition was a logical fit for CountPlus.
“We believe we are the natural home for Count Financial’s strong community – they already fit our ‘family photograph’,” he said.
“We have a shared history with them and we look to a stronger future together as we re-join.”
Count Financial is expected to incur a post-tax loss of approximately $13 million for the 2019 financial year, and the divestment is not expected to have a material impact on the Commonwealth Bank’s net profit after tax.
At midday, shares in CountPlus Limited were up 35.05% to $0.655, Commonwealth Bank of Australia was also trading higher, jumping 0.6% to $80.35.