This article is from the Australian Property Journal archive
Record Investments and Allco Finance Group have agreed to merge and form a $2.7 billion financial services group.
Allco, the largest shareholder of Record Investments, had been in merger talks since October last year.
Record, which has a market capitalisation of $2 billion, will issue 86.43 million shares to Allco’s existing shareholders in return for all the shares in Allco.
Based on the three month VWAP for Record shares of $8.75, the implied value of Allco’s businesses is $756 million.
Allco chairman David Coe said the proposed merger will complete the alignment of Record and Allco and creates a fully integrated, globally focussed, financial services group.
"This is the next step in the development of Allco and Record. This merger will create a single business model with global reach in our core business segments of aviation, shipping, rail, property and financial services under a strong governance framework as well as providing the framework for expansion into other asset classes. Allco is confident that the combination of the two businesses will produce a business that will exhibit strong growth,” he added.
Record Related Party Committee chairman Barbara Ward said the merger will provide the next step in creating long term sustainable earnings for Record shareholders.
“Allco’s transaction experience and global focus will continue to provide Record shareholders with a wide range of investments. The merger will take Record from a passive investment vehicle to an integrated group which combines Record’s capital base with Allco’s origination, asset management and financing expertise,” Ward said.
The merger will not affect the operations of Allco’s satellite entities, including Record Realty, Allco Max Mortgage and Securities Trust, Allco Hybrid Investment Trust and Alleasing Trust, as Record acquires both the management rights and the executives responsible for the ongoing operation and management of those entities.
In addition, the merger does not affect Allco’s interest in the manager of Allco Equity Partners Limited, with Record acquiring all of Allco’s interest in the management company.
If the merger is successfully, it is forecast to deliver a net profit after tax of $140.5 million for the 2006 financial year, compared to pro forma forecasts for Record of $94.9 million if the merger does not take place.
By Adam Parsons
