Magellan Financial Group (ASX:MFG) entered into an agreement to merge with Barrenjoey Capital Partners, a move designed to create a "diversified, client-focussed Australian financial services group, with a proven talent base across investment management, corporate finance, equities, fixed income and capital markets."
The transaction values Barrenjoey at an implied $1.62 billion on a 100% equity basis.
The path to "completion" involves a multi-stage funding strategy.
Initially, MFG will increase its economic interest in Barrenjoey through a non-underwritten institutional placement of ordinary shares and a subsequent share purchase plan for shareholders in Australia and New Zealand.
Following the satisfaction of specific conditions, MFG will acquire the remaining issued capital by issuing new MFG ordinary shares, known as "consideration shares," to Barrenjoey shareholders.
The total consideration for the shares MFG expects to acquire at completion is estimated at $903 million.
Barrenjoey enters the merger with momentum, reporting $522 million in revenue and $108 million in adjusted net profit after tax and before amortisation over the last twelve months.
The firm has "consistently exceeded expectations with strong organic growth, attractive returns on capital, and an entrepreneurial culture that positions the combined group for continued expansion."
The consolidation aims to leverage Barrenjoey's established market leadership to bolster MFG's broader financial services portfolio.