Financial software company Iress (ASX: IRE) has unveiled plans to acquire managed fund provider OneVue Holdings (ASX: OVH) for $0.40 per share, in what Iress chief executive officer Andrew Walsh described as “structural shifts and changing market dynamics”.
The deal is set to go ahead with the help of a $150 million capital raise, with Goldman Sachs acting as the financial adviser, and a supplementary share purchase plan worth up to $20 million, pushing Iress’s total capital raise to $170 million.
Iress plans to issue a total of 14.4 million new shares with all formalities likely to be completed by the end of Q3 2020.
While the transaction is expected to be earnings dilutive in the near term, Iress said it intends to deliver shareholder value by tapping “significant earnings upside potential” through continued innovation delivering automation and efficiency for clients.
OneVue confirmed that its board delivered a unanimous recommendation for its shareholders to vote in favour of Iress’s proposal “in the absence of a superior proposal and subject to the independent expert concluding that the scheme is in the best interests of OneVue shareholders.”
“The offer represents a significant premium to our current share price and a full cash offer provides compelling certainty for our shareholders. Iress is a company we have significant respect for and we know they are committed to delivering high levels of service to our clients and are looking forward to working more closely alongside our clients and partners,” OneVue managing director Connie Mckeage said.
Ms Mckeage will continue her role post takeover and is expected to consult Iress on growth, strategy and client initiatives after completion.
Currently, OneVue is the largest single third-party fund registry in Australia with the takeover expected to provide Iress with a direct opportunity to better connect advice recommendations with implementation and to leverage its strength in software and data.
Both parties have said that OneVue’s dominant position in administration, funds, super and investments, combined with Iress’ strength in software and data, would drive innovation through technology and deliver software that “brings advice and investments closer together”.
Meanwhile, Iress chief executive officer Andrew Walsh explained that the debt financing required to acquire OneVue would strengthen the company’s balance sheet and “provide capacity to pursue further investment opportunities”.
“With structural shifts and changing market dynamics, our strategy is to continue to generate long-term growth opportunities, leveraging technology and automation, while helping clients achieve efficiency, compliance and growth,” he said.
“The combination of OneVue’s strength and position in administration of managed funds, superannuation, and investments, with Iress’ strength in software and data will drive innovation through technology.
“This includes the development of software and services that brings advice and investments closer together, resulting in greater efficiency and productivity for professional advisers and businesses in Australia,” said Mr Walsh.
OneVue’s shares were up over 52% to $0.365 in morning trade, while Iress was in a trading halt, last trading at $11.21.