Findlay Heralds Consolidation With Aequs Scrip Bid

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May [1]

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August [1]

Findlay Heralds Consolidation With Aequs Scrip Bid

The Age

Wednesday November 12, 2008

Mark Hawthorne

EMBATTLED stockbroking firm Findlay Securities has made a bold all-scrip bid for listed rival Aequs Capital, in a move many believe heralds a period of major consolidation of the stockbroking sector.

Findlay Securities is offering 11 of its shares for every four Aequs shares, or 2.75 to one.

On Monday, Aequs directors Robert Spano and Drew Metcalfe sold 5.29million of their Aequs shares to Findlay at 24.75 a share - the scrip offer represents a 33% premium to that price.

The board of Aequs immediately issued a Target's Statement recommending that shareholders accept the offer.

Aequs, one of seven listed stockbroking companies in the country, posted a $90,000 loss in the first quarter of this financial year.

Findlay has seen a huge clear-out of its board and executive teams since Otto Buttula bought into the company earlier this year.

Mr Buttula sold his listed broking company IWL to Commonwealth Bank last year, at the peak of the market, for $350million, and pocketed $52million. In his 10 years at the helm of IWL, the company completed eight takeovers.

He now owns a 19.9% stake in Findlay and 4.98% of Aequs, and will lead the combined board of the two companies once shareholders rubber stamp the merger deal.

Before making the takeover bid for Aequs, Mr Buttula cleaned out the board and executive team at Findlay - some members of which had endured a few brushes with the Australian Federal Police over allegations of market manipulation. That included former Findlay director Robin Armstrong, whose home was raided by AFP officers in February in relation to a probe into Fairstar.

Aequs also has its problems, with two significant pieces of litigation before the courts.

The global credit crunch, shrinking markets and the ASX's decision unilaterally to increase the capital requirement of clearing brokers from $100,000 to $10million means many smaller brokers are doing it tough.

By merging, directors of both Findlay and Aequs believe they can meet the $10 million capital requirement and give the company a competitive advantage over smaller rivals.

"I think we are in for some interesting times in the stockbroking sector," Mr Buttula told BusinessDay. "And not just at the small end of the market, either. I think we will see plenty of action at the bigger end of the market."