LONDON (Alliance News) - Manx Financial Group PLC announced on Wednesday its wholly owned subsidiary Bradburn Ltd will acquire the entire capital of finance broker Blue Star Business Solutions Ltd for up to GBP4.0 million.
An initial payment of GBP1.5 million in cash will be provided at completion.
This will be followed by 50% of the Manx enlarged earnings before interest, tax, depreciation and amortisation in Blue Star for three years post completion arising from ongoing trading of the Blue Star following completion of the acquisition.
In addition, Manx will pay 50% of the incremental net profit that the bank realises as a result of it taking up Blue Star loan proposals post completion until the third anniversary of the transaction.
This will be paid annually with a final payment in fourth year for the unrealised discounted tail of the portion.
Manx said the maximum aggregate consideration payable by Bradburn, including earn-out consideration, is capped at GBP4.0 million.
Furthermore, Douglas Grant, Manx's Finance Director, and Denham Eke, Chief Executive Officer of Manx, will join Blue Star's board.
For its financial year to the end of March, Blue Star will fund in excess of GBP9 million of loan proposals and as at March 31, 2017 reported an unaudited profit of GBP101,252 after tax. Post-acquisition, Manx will invest in Blue Star to allow it to grow profitably by gaining market share and through its banking subsidiary, Conister Bank Ltd, write the majority of its funding requests.
"The asset backed finance market in the UK recorded its seventh year of successive growth last year, led by the broker finance market which grew 14% year on year. This is a market conister bank active within and indeed wrote more than GBP16 million of business last year. This acquisition will bolster our presence in this attractive market sector and act as a catalyst for future growth. Both Marcus and Mark have great experience in the UK broker market and are keen to grow the business with our assistance and I am equally keen to work with them to achieve this goal," said Manx Finance Director Douglas Grant.
Shares in Manx were higher 3.1% at 12.53 pence per share on Wednesday.
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