Research houses in dispute over merger

The planned merger of two investment management research houses has hit the rocks, after Zenith Investment Partners advised Chant West Holdings that there had been a "material adverse change" in the Chant West business and it would not be proceeding with its offer.

Chant West responded in a statement to the ASX that it disputed Zenith's assertion and proposed to continue with the sale.

The A$12 million deal, which was announced in February, involves Chant West selling its superannuation research and consultancy business to Zenith.

The research business had revenue of $6.5 million and made a pre-tax profit of $1.5 million in 2018/19.

Chant West said it would retain a financial planning technology business, Enzumo, which generated $1.9 million of revenue and made a pre-tax profit of $84,000.

Yesterday Chant West said it had received a letter from CW Bidco "purporting to immediately terminate the business sale agreement dated 18 February."  CW Bidco is a wholly owned subsidiary of Zenith Investment Partners.

Chant West said it "rejects the allegations made by CW Bidco that a material adverse change in the business has occurred. Chant West will deliver a positive EBITDA for the first half of 2019/20 and we remain confident it will continue this trend in the second half of the year."

The company said it would press ahead with its shareholder meeting to approve the deal.