Netwealth moves for Praemium merger

Leading platform provider Netwealth has moved to merge with Praemium.

The company announced to the Australian Securities Exchange (ASX) today that it had made a non-binding indicative proposal to merge Netwealth and Praemium Limited to acquire all of the issued shares in Praemium by way of a Scheme of Arrangement.

Netwealth said that the proposed transaction, if implemented, would enhance Netwealth’s platform with further scale and accelerate the development of specialist capabilities to capture the long-term growth potential of the expanding market for wealth management services.

Under the terms of the transaction, Praemium shareholders would be entitled to receive one new Netwealth share for every 11.96 Preamium shares alongside a cash consideration, reflecting the net proceeds achieved from the sale process for Praemium’s international operations in excess of an attributed valuation of $50 million less tax transaction costs.

The ASX announcement said the proposed transaction, if implemented, would be expected to create substantial value for both Netwealth and Praemium shareholders given the compelling strategic rational and material cost of revenue synergies.

It said the combined group would be the largest independent wealth management platform in Australia by net flows with approximately $16 billion net flows for the 12 months to 30 September 2021 and would create the leading platform for wealth advisors and investors across all wealth segments.

The board of Praemium has recommended against acceptance of the bid on the basis it undervalues the company.