(Alliance News) - Mortgage Advice Bureau Holdings PLC said Tuesday it has acquired a majority stake in fellow mortgage broker First Mortgage Direct Ltd for GBP17 million in cash.
MAB will buy an 80% stake in Edinburgh-based First Mortgage for GBP16.5 million, valuing the firm at GBP20.6 million. The acquisition is expected to close on July 1.
This will be partially funded by existing cash resources and partially by a partial drawdown of a new GBP12 million revolving credit facility.
In order to pay back the drawn-down facility as quickly as possible, MAB will reduce its dividend payout to 75% of post-tax profit from the current 90%. This is expected to first impact the final dividend for 2019. In 2018 Mortgage Advice Bureau paid out a 12.70 pence per share final dividend.
"This acquisition is central and complementary to our strategic objective to grow our market share of new mortgage lending," MAB Managing Director Ben Thompson said. "First Mortgage is a highly reputable, forward thinking business of significant scale with a clear strategy to deliver further strong year on year growth."
"This enables us to pursue at pace our aim to accelerate group growth through excelling in areas of specialisation, and in particular, building on our omni-channel choice for customers," Thompson added. "This approach best positions MAB to benefit in an evolving intermediary sector. MAB's new technology developments will further strengthen our capability and ambition in this regard."
Shares in MAB were 1.7% lower at 572.00 pence in in London on Tuesday.
Mortgage Advice Bureau (MAB1)