In a statement to the ASX in response to media reports that a second bidder had emerged, Diverger confirmed that COG Financial Services had made a non-binding indicative offer to acquire the business.
“Diverger confirms it has received a non-binding indicative proposal from COG subject to a number of conditions,” Diverger said.
It added that the board does not consider the COG proposal to be a “superior proposal” than the September offer made by Count.
Count announced the strategic acquisition of Diverger last month, under which Count would acquire 100 per cent of the issued shares in Diverger by way of a scheme of arrangement that values Diverger at $45.3 million.
COG believes it has put forward a superior offer, which would take the form of $1.41 per share, made up of cash of $0.68 per share and $0.73 of COG scrip – a valuation of $56 million for Diverger.
“The indicative proposal price represents a 32 per cent premium to the current share price of AU$1.07 per share and a premium of 38 per cent over the 30-day VWAP (AU$1.01387) and, therefore, represents compelling value for the holders of Diverger shares,” COG said in its offer.
Diverger added that the board is working through the new proposal but has not yet made any recommendation in relation to the proposal.
“The board has not changed their unanimous recommendation in favour of the current scheme proposal with Count,” Diverger said.
“Shareholders should note that the COG proposal is non-binding and there is no assurance that it will proceed in accordance with its terms or at all. Shareholders are urged not to take any action in response to the COG proposal.”
However, COG said that the proposed transaction is “in the best interests of both sets of shareholders”.
“For [Diverger] shareholders, it gives them access to a larger, more liquid share register compared to the alternative proposal and for COG shareholders, it provides an exposure to an aligned segment of its existing businesses,” it said in an ASX announcement.
“To fund $10 million of the cash consideration under the NBIO, COG would undertake a capital raise, to be fully underwritten by Ord Minnett Limited. This capital raising, combined with other funding sources, provides full funding for the acquisition.”
When the Count acquisition was announced, the business said it would represent a diversified financial services provider bolstered by total revenues of $132 million, funds under management and advice (FUMA) of $29 billion, around 550 advisers, 563 accountants, and a significantly expanded services function.
“This is an exciting transaction that continues the disciplined execution of our growth strategy, bringing tangible benefits to Count and Diverger shareholders, our member firms and their clients. Count and Diverger both have a deep heritage in accounting and financial advice, with complementary strengths that will position us as an industry leader,” Count chief executive Hugh Humphrey said at the time.
Diverger’s major shareholder, HUB24, issued a statement of support for the Count transaction shortly after the announcement, noting it would vote in favour of the scheme in the absence of a superior proposal.
However, DMX Asset Management – a holder of a 5.2 per cent stake in Diverger – publicly rejected Count’s proposed acquisition of Diverger, with DMX management expressing concerns about the undervaluation of Diverger.
The firm cited a “significant” disconnect between the proposed transaction’s terms and Diverger’s intrinsic value.
“While it is encouraging to see interest in companies that we own, these bids are at levels well below our assessments of intrinsic value,” said DMX, alluding to two other bids it has received for companies it partly owns.
