Sequoia Financial to sell 80% stake in Morrison Securities to New Quantum
Sequoia Financial Group has announced the signing of a share purchase agreement with New Quantum Holdings for the sale of 80% of Morrison Securities, an Australian company specializing in investment and trading services.
Under the terms of the agreement, Sequoia Financial Group will receive a cash consideration of AUD 40.5 million. The transaction will take place in two tranches, with an initial tranche accounting for 50.1% of Morrison Securities and a cash consideration of AUD25.5 million. A further tranche will involve the transfer of 29.9% of Morrison Securities and a cash consideration of AUD 15 million, expected to be completed by 31 August 2023.
The binding share sale and purchase agreement, along with a shareholder’s agreement, were officially executed today, marking a significant milestone in the transaction. The financial closing of the initial tranche is projected to be finalized by Wednesday, 7 June 2023.
To facilitate the transaction, New Quantum Holdings has already deposited AUD $10.5 million, with an additional payment of AUD $15 million slated for completion. Upon receipt of these funds, New Quantum Holdings will acquire 50.1% of the shares in Morrison Securities, which will be held in trust until the Stage 2 final payment is settled before 31 August 2023.
As part of the share transfer, Morrison Securities is required to maintain a minimum of AUD 10.5 million in debt-free working capital at the time of the final share transfer, expected to occur before the end of August 2023.
Sequoia Financial Group has confirmed that as of 30 April 2023, Morrison Securities possessed debt-free working capital exceeding this requirement by approximately AUD 1 million. Furthermore, Sequoia Financial Group assures that there will be no operational or managerial changes within the Morrison Securities business during the staged sale process.
In the event that the Stage 2 payment is not fulfilled by 31 August 2023, Sequoia Financial Group retains a call option to repurchase the 50.1% of Morrison Securities shares transferred under the initial tranche for consideration of AUD 17.85 million.
Upon successful completion of the transaction, Sequoia Financial Group will maintain a 20% shareholding in Morrison Securities, which will operate with an independent balance sheet. This strategic move is expected to position both companies for future growth and capitalize on emerging opportunities within the financial marketplace.
The completion of this transaction, subject to successful finalization before 31 August 2023, is anticipated to reshape the landscape of the financial services industry, fostering new avenues for innovation and technological advancements.
Garry Crole — Sequoia Financial Group Managing Director said: “While Sequoia will retain a minority interest in Morrison Securities going forward, the business will now benefit from a new owner with the capacity to capitalize on the further growth opportunities for the Morrison’s business.
“I am pleased this transaction has cleared the stage 1 completion phase and look forward to working alongside New Quantum as it looks to add technology solutions to the marketplace to enhance the user experience.”