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One of Australia's oldest companies is set to change hands after wealth manager Insignia Financial agreed to a $3.3 billion buyout from New York-based CC Capital, which was the last remaining suitor in a bidding war that began in December and saw other US players Bain Capital and Brookfield Capital Partners withdraw.
Insignia has entered a scheme implementation deed (SID) for CC Capital to acquire the group at $4.80 per share, representing a 56.9 per cent premium to the company's share price on 11 December before Bain Capital lobbed its first bid.
Both Bain and CC Capital were offering a higher price of $5 per share in March, but Bain pulled away in May “due to the macro uncertainty caused by the volatility in global capital markets”.
The share price fell 14 per cent in the aftermath of Bain's decision, but has been steadily rising since then, especially since Insignia flagged earlier this month that it was close to reaching a deal and that CC Capital was just finalising financing and investment committee approvals.
But the market appears to have underestimated how hungry CC Capital was to acquire the business, as prior to today's trading the share price was 22 per cent short of the eventual agreed price.
Founded in 1846, the same year as the Courier Mail and soon after the establishment of the Penfolds and Lindemann's wineries, Insignia has $330 billion in funds under administration and management, with its leading shareholders including Tanarra Capital, Hostplus, Mitsubishi UFJ Financial Group, First Sentier Investors and the Australian Retirement Trust.
The board expects the scheme to be implemented in the first half of the 2026 calendar year, provided it receives approval from shareholders, the Australian Prudential Regulation Authority (APRA), the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC).
Insignia directors unanimously recommend shareholders vote in favour of the deal if no superior proposal is forthcoming. In making its recommendation, the board took into account the competitive process since December which resulted in eight indicative, non-binding and conditional offers, the lengthy and comprehensive due diligence process undertaken by CC Capital, and the significant premium the offer entails.
The board also considered the recent and potential impact of market volatility on global capital markets in reaching its conclusion.
"The decision to recommend this offer follows extensive work by the board and its advisers to understand the medium-to-long term value of the company, with the board concluding that the offer should be put to shareholders for their consideration," says Insignia Financial chairman Allan Griffiths.
"This offer recognises the underlying value of the Insignia Financial business, our associated brands including MLC, and our vision to become Australia's leading and most efficient wealth management company by 2030," adds Insignia's chief executive officer Scott Hartley.
"We are and will continue to be focused on executing against our strategy and delivering for our customers and shareholders," says Hartley.
Today's announcement coincided with the release of Insignia's June quarter results which saw a 2.6 per cent lift in funds under management and administration, and total new inflows of $2.1 billion.
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