Ultimate Finance Group will snap up Ashley Commercial Finance in an audacious £4.75m reverse takeover.
The group will pay £3.7m in cash and £1.05m in shares.
Almost £2m of the funds were raised by a share placing, which was buoyed by the firm’s strong recent performance.
Ultimate, which will have a market cap of almost £8m after the transaction closes, estimates the deal will help it to save £400,000 a year as well as boosting earnings potential from the first year.
Shares in Ultimate, an Aim-listed provider of financial services to small businesses, soared last month after it reported a 196 per cent increase in full-year pre-tax profit.
The firm, which provides companies with an alternative to bank overdrafts, made a pretax profit of £406,000 compared with £137,000 the previous year. That beat house broker WH Ireland’s forecast of £350,000.
Clive Garston, chairman of Ultimate said: “We believe we will continue to see growth in demand for our services as banks restrict the overdraft facilities available to SMEs.”
Analysts at WH Ireland said of the takeover: “Ashley is a highly complementary acquisition for Ultimate. Given the level of synergies, plus Ashley’s additional access to funding as part of the larger entity, we expect the deal to be earnings enhancing from year one.”
Arbuthnot Securities acted as nominated adviser and joint broker on the reverse takeover. Heading up the team was corporate finance director Antonio Bossi.
Before joining Arbuthnot in 2002 Bossi worked for ABN Amro Wholesale Banking for a year. From 1995 to 2001 he worked for Baring Brothers International, first as assistant director, then as vice president. He was educated in Italy at Politecnico di Milano.
Bossi has also advised on share placements by Vane Minerals and Xcite Energy this month.
Last month he landed the role as advisor to fast growing Aim?listed international investment company Brainspark. Other clients include Midas Capital, Proton Power Systems and Viridas.
Also working on the deal for Arbuthnot was Paul Gillam, who is on the corporate finance team. He previously worked as an analyst for UBS Investment Bank for two years. Davies Arnold Cooper acted as legal advisor on the deal.