The Findex group today announced the proposed acquisition of Crowe Horwath Australasia Ltd (ASX: CRH) at a price of $0.50 cents per share which, if successful, would ascribe an enterprise value around $200 million and result in the privatisation of the Crowe Horwath business in Australia and New Zealand.
The transaction will take place by way of Scheme of Arrangement, with a Scheme Implementation Agreement having been entered into between Crowe Horwath Australasia Ltd and Findex Australia Pty Ltd. The acquisition price implies an equity value for Crowe Horwath of approximately $137 million. The balance represents Crowe Horwath debt for which Findex is assuming responsibility.
As part of the proposal, Crowe Horwath’s major shareholder, Alceon, has entered into an option which provides Findex with the right to purchase Alceon’s shareholding of approximately 19.87% in Crowe Horwath at the same price of $0.50 cash per share.
The bid follows a lengthy period of due diligence by Findex that included an extended round of face-to-face meetings, presentations and video conferences between senior Findex personnel, led by Findex Group CEO Spiro Paule and the majority of the Crowe Horwath principals.
These meetings took place across the main state offices of Crowe Horwath’s network of 110 locations in both Australia and New Zealand.
The Findex bid has the full support of the Crowe Horwath board who are recommending shareholders accept the offer in the absence of a superior proposal and subject to an independent expert concluding it is in their best interests.
Crowe Horwath Chairman Richard Grellman said: “After careful consideration, the Board has unanimously concluded that the proposal from Findex is a compelling proposition, offering Crowe Horwath shareholders a significant premium to the market price and fair value.”
Findex Group CEO Spiro Paule said: “Findex has a long-term strategy of growth through acquisition of quality businesses.
“We believe the Crowe Horwath businesses in Australia and New Zealand are a natural fit to the Findex stable because of the synergies between accounting practices, financial advice and financial services – a mix in which we have considerable experience.
“We plan to maintain the Crowe Horwath brand, and to grow the business, which we believe will prosper under our systems, culture and guidance,” Mr Paule said.
Crowe Horwath is a leading player in the SME market and is one of the largest and most significant accounting practices in Australasia, ranked 5th by size in the market after the ‘Big Four’.
“Our group has acquired and successfully integrated businesses on more than 80 occasions since 2000 and Crowe Horwath itself is the result of a ‘roll up’ strategy executed over a similar period.
“Our corporate history demonstrates we are proven long term owners and buy businesses with the intention of adding and unlocking further value,” Mr Paule said.
“The hallmarks of the Findex Group include a strong and open corporate culture overlaid on a business built on robust systems and processes – we are the only financial services organisation in Australasia of any scale that is ISO 9001 quality accredited.
“It will be business as usual for Crowe Horwath clients, principals and staff but over time we are confident clients will notice and appreciate further enhancement to the already high level of service,” Mr Paule said.
The Findex Group is Australia’s largest non-aligned and privately owned financial advisory company. It has businesses across the spectrum of the financial advice industry including high net worth, middle range, public sector and online. The advisory business model is based on independence from investment products and non-conflicted advice.
The addition of the Crowe Horwath business in Australia and New Zealand will create an important strategic pillar in Findex, allowing the Group to strike a more balanced service offering between financial advice and accounting. In addition to its wealth management, lending and risk protection divisions, the business Group now adds further expertise in accounting plus significant audit and corporate advice capabilities.
“The Findex vision is based on our individual business offices being able to meet as many of our clients’ financial service and advisory needs as possible from under the one roof. We aim to offer a ‘family office’ suite of services that are open to all, rather than just a wealthy few, which is the typical domain of a ‘family office’ structure.
“The acquisition of Crowe Horwath, should we be successful, will significantly contribute to the further realisation of this goal,” Mr Paule said.
Findex is part owned by funds advised by global investment firm KKR and was advised by Jeff Singh of Chase Corporate Advisory, King & Wood Mallesons and Deloitte on the acquisition.
Findex Group businesses have around $8 billion under portfolio management, prior to the Crowe Horwath acquisition.
