Millfield Partnership and Inter-Alliance are merging to form a single national IFA firm worth a combined annual turnover of £105m.
Details announced on Friday reveal the merger is effectively a takeover by Millfield, and Millfield has managed to secured an additional £15m in loan funding to finance the deal from its existing major shareholders - Axa Sun Life, Friends Provident, Prudential, Scottish Widows and Skandia.
This should create a national firm – branded under the Millfield Group - with over 1800 advisers.
As part of the deal, Inter-Alliance’s Keith Carby, Michael Burne and Tom Morton will join the Millfield board while Roger Brosch, Darrell Smith and Bryan Beeston will step down and stay on as directors of the new executive board.
Millfield will offer existing Inter-Alliance shareholders five new Millfield shares for every 236 Inter-Alliance they currently hold, which are valued at 1.25p, as the merger will generate an issuance of 19.2m new Millfield shares.
Additional financing for the purchase appears to be designed to cover a further funding requirement for the Inter-Alliance business as details of the current trading and prospects for Inter-Alliance indicate should the merger not go ahead, the company’s directors “believe that additional funding would be required at that time to provide an adequate level of working and regulatory capital”.
This is a similar statement made during its failed merger attempt with Berkeley Berry Birch, which specified cost reductions worth £2m were deferred pending merger discussions.
This time, it appears the aborted merger attempt with BBB has also generated an additional charge of £1.4m.
A joint statement issued by the two firms says the increased regulatory burden on financial intermediaries - since the FSMA was introduced in 2001 – has already encouraged a trend of industry consolidation as well as greater use of technology.
“Directors of Millfield and Inter-Alliance believe that this trend towards sector consolidation is set to accelerate as a result of proposed regulatory changes, including depolarisation and the arrival of mortgage and general insurance regulation,” says a statement by the firms.IFAonline
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