On Monday, the two companies released further details of the agreement for HUB24 to take a sizeable equity stake in Easton as the platform provider divests its licensee business, Paragem.
In a statement, Easton said HUB24 would make a proportional takeover offer for one in every three shares of Easton.
“The offer represents a variation of the arrangements previously announced, whilst retaining the key features of the proposed investment in Easton and with comparable financial outcomes for HUB24 and Easton shareholders,” Easton said.
“Importantly the revised form of offer will eliminate the need for Easton to make a share placement to HUB24, the related requirement to convene a specific meeting of Easton shareholders and the uncertainty associated with the off-market buy-back offer in terms of Easton’s share capital and cash position at the completion of the buy back.”
The transaction was originally announced in October, when HUB24 said it would sell its advice business Paragem to Easton in exchange for $4 million worth of shares in the listed wealth firm, who owns dealer groups Merit Wealth, GPS Wealth and the SMSF Expert.
Easton said the transaction implementation deed signed by the two companies would give HUB24 the right to appoint two directors to Easton’s board, while Easton shareholders would be paid a special dividend of 5 cents per share and 1.7 million options over Easton shares would be given to HUB24 at an exercise price of $1.20 per option.
A share sale agreement had also been executed through which Easton would issue 3.3 million shares to HUB24 in exchange for the transfer by HUB24 of all the shares in Paragem. The transaction would be effective by early February and would see Paragem’s Nathan Jacobsen appointed as managing director of Easton.
“If all Easton shareholders accept the offer, HUB24 would be entitled, on completion of the offer, to approximately 39.2 per cent of total fully paid ordinary shares in Easton,” the company said.
“The Easton board regards the offer and related arrangements with HUB24 as a transformational opportunity for Easton, with clear and compelling benefits for Easton shareholders. The Easton Board intends to recommend that shareholders accept the offer from HUB24 in the absence of a superior offer.”
Or to phrase it another way, HUB24 has started the process of ensuring all Easton group advisers transition their clients to HUB24, which was the point of the whole transaction in the first place.