Australian Finance Group has notified the Australian Securities Exchange that its merger with rival mortgage aggregator Connective Group is not likely to proceed, expressing its “disappointment” with the lengthy and unresolved court approval process that has held up completion of the deal.
AFG and Connective announced their merger agreement in August 2019. In February 2020, the ACCC raised concerns about the A$120 million deal saying: “Combining AFG and Connective would create the largest aggregator in Australia by a significant margin, accounting for almost 40 per cent of all mortgage brokers operating in Australia.
“The ACCC is concerned there will be limited similar alternatives for brokers to switch to. This may negatively impact the services offered to brokers.”
However, in June last year the competition watchdog said it would not oppose the deal because it was confident the merged entity would continue to face “robust competition”.
The Victorian Supreme Court held a hearing in March 2020 to review the transaction. Its decision has not been delivered.
In a statement on Friday, AFG said the end date to satisfy the conditions under the implementation deed entered into by the parties is 31 August 2021.
AFG chief executive David Bailey said in a statement: “Given the ability of a party to the court proceedings to appeal the decision when it is delivered, AFG has concluded that it is not likely that the merger will be able to complete prior to the expiry of the implementation deed.
“The extraordinary length of time that the judgment has taken has blocked our ability to complete this transaction. Disappointingly, this means the merger is not likely to proceed at this time.
“We remain convinced the merger would deliver benefits to our brokers and customers. We will continue to examine opportunities for future investments as they arise.”