Australia's competition regulator says it will not oppose a planned merger between mortgage aggregators Australian Finance Group and Connective, despite holding previous concerns around competition.
Perth-based AFG announced its plans to merge with Connective last year, in a deal where AFG will pay $60 million in cash and issue around 30.9 million company shares to Connective, which is headquartered in Melbourne.
The deal is today valued at around $121.4 million, with AFG shares up 17 per cent to trade at $1.99, as at 1:25pm AEST.
The Australian Competition and Consumer Commission had raised preliminary competition concerns over the combined group, which would account for nearly 40 per cent of all mortgage brokers operating in the country.
Chairman Rod Sims today said the ACCC, after completing a second round of inquiries, believed the merged group would still face robust competition, including from Sydney-based Finsure and aggregators owned by the National Australia Bank.
“Mortgage brokers will still have a range of other aggregators, should they become dissatisfied with the combined AFG-Connective’s pricing or service,” he said.
“Lenders will likewise have a range of aggregators through which they can access potential consumers.
“Ultimately, we found that a substantial lessening of competition was not likely.”
AFG chief executive David Bailey said the decision was good news for competition in Australia’s home loan sector.
“In response to the digital disruption and other challenges facing the sector, our merged businesses will be better positioned to invest in digital technologies and innovation,” he said.
Mr Bailey said the transaction would ensure AFG-Connective offered a broad range of home loan products, as well as provide a sustainable channel for non-major lenders.
Court approval for the transaction had begun, AFG said, with a final decision anticipated after the second half of the 2020 financial year.