TALK of further consolidation among stock broking firms has come to pass with Patersons Securities unveiling its latest merger deal, with Melbourne-based Tolhurst Group, this week.
In a deal valued at up to $12 million, Patersons has reached in-principle agreement to buy the broking business of listed company Tolhurst which, if approved, will boost Patersons' turnover from $13 billion a year to $26 billion.
The merger will also create one of the country's largest full service, retail stock broking businesses, Tolhurst claims, and provide it with up to a 31 per cent interest in Patersons.
It will also cement Patersons' number one position on WA Business News' Book of Lists, with employee numbers likely to be boosted to over 400 and client numbers jumping from 120,000 to 370,000.
Patersons executive chairman Michael Manford said he expects the deal to be consummated in March, however the business integration, along with last month's merger with Montagu Stockbrokers, will likely give pause to the company's acquisition plans.
"There will be a period of consolidation after this merger," Mr Manford told WA Business News.
"But this [merger] takes us to the next level of market size and turnover, and will provide us with scale and economy particularly on the east coast."
Mr Manford said the main risk of the merger was that not all of Tolhurst's advisers and clients would come over to Patersons, with employee casualty numbers, if any, yet to be determined.
With the Montagu merger, 22 out of 90 employees will join Patersons this week as the acquisition is finalised.
Mr Manford said merger talks with Tolhurst started a couple of years ago before discussions fizzled out, picking up again three months ago, with Tolhurst announcing late last year that it was is discussions with several parties.
Patersons has an exclusive due diligence period and may receive a $50,000 break fee if Tolhurst shareholders do not approve the deal.
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