SYDNEY: Consolidated Operations Group Limited (COG) and CML Group Limited have entered into a Scheme Implementation Agreement (SIA) to a proposed merger to establish a leading financial services group focusing on servicing SME businesses in Australia.

The merger will be implemented via a court-approved scheme of arrangement with CML shareholders pursuant to which COG will acquire all of the issued share capital of CML.

The merger will be implemented via a scheme of arrangement with CML shareholders with the new merged group listed on the Australian Securities Exchange (ASX), initially under COG, with a new name for the merged group to be agreed between the parties.

The SIA contains customary reciprocal “no shop” and “no talk” provisions and a “notification” and “matching right” provision in favour of COG, with a reciprocal break fee payable by either party in certain circumstances.

Both groups announced the launch of simultaneous equity raisings via pro rata non-renounceable entitlement offers of approximately A$20.2 million for COG and A$14.5 million for CML.

The proposed combination satisfies both groups’ respective strategic objectives. Namely for COG, it expands its existing in-house product capability and broadens its funding sources. For CML, the combination delivers cross-selling opportunities with which to accelerate volume growth and achieve improved scale for all its finance products.

Commenting on the Merger, Andrew Bennett, CEO of COG, said: “The merger with CML accelerates the execution of COG’s strategic plan of delivering product to COG’s distribution network. The combined entities increased market capitalization and liquidity should provide additional value to shareholders. We see this transaction as a partnership, with compelling benefits for both sets of shareholders.”

Commenting on the Merger, Daniel Riley, Managing Director of CML said: “The CML Board considers the implementation of a Scheme with COG to reflect a compelling value proposition for CML shareholders, who will benefit from growth in lending volumes through leverage of COG’s substantial existing distribution network of asset lending brokers.”We see this partnership as providing the opportunity to gain market share in secured business lending at a faster rate than could be achieved independently, driving earnings growth in the merged entity to maximize shareholder value. The transaction will provide CML shareholders with a material interest in a substantially larger and diversified business.”