News blog
Astaire Group
- BY: Andrew Hore |
- POSTED: 10/02/2010 |
- COMMENTS: Add yours
Aim adviser Astaire Group is buying private client broker Hoodless Brennan for £3.61m in its latest move to consolidate the smaller company broking sector.
Astaire is offering 0.9403p in cash and 4.4665p of convertible loan notes for each Hoodless Brennan share. Acceptances have been received from owners of 66.6% of the share capital. Astaire’s broker Fairfax IS values the convertible loan notes at 55p in the pound. The conversion price is 6p per Astaire share.
The private client stockbroking side of HB will be rebranded and there should be cost savings from merging the businesses. There should be other cost savings. HB has taken a lease on a 8,000 square foot office in the City of London and the two businesses could both move to this site. The Bristol operations can also be merged.
The deal will also enable Astaire to move into market making without setting up a new operation.
Astaire will not be investing in the part of the broking business which acquires stakes and then sells them on. HB has already sold its online broking business.
HB’s corporate finance operations were spun off last year and are now known as Allenby Capital. HB still owns 9.9% of Allenby and could increase the stake to 50%.
At 3.375p a share, Astaire is valued at £7m. Astaire had net cash of £9.1m at the end of June 2009. The net asset value was £16.8m, or £12.3m excluding intangibles. The acquisitions of Ruegg and Dowgate and the sale of the Australian business happened after June.
Investment company Evolve Capital currently owns 53.6% of Astaire but this will be diluted by conversion of the loan notes. Evolve says that it is not worried about its stake falling below 50%.
Evolve also says that it is considering a restructuring of its relationship with Astaire because it feels that the true value of the businesses is not recognised.
At 3p a share, down 0.25p on the day, Evolve is valued at £5.35m. The stake in Astaire is worth just over £3.5m at its current market value.
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