WHK Group, the listed entity behind accounting firm Crowe Horwath, has received a merger proposal from SFG Australia, which owns accounting and financial planning firms including Western Pacific and Shadforth.
Key terms of the proposal between the two listed companies include a merger ratio of 0.503 WHK shares for each SFG share.
This would result in WHK shareholders owning around 42 per cent of the securities in the merged entity.
It is not uncommon for accounting firms to have a financial planning arm, especially in the private client and family business field, where wealth management and business advice tend to intersect.
SFG Australia was formed in 2011 when the listed Snowball Group merged with private Shadforth Financial Group to form an entity with more than $14 billion in client and third-party funds under advice.
The two groups already had a history of mergers behind them.
Western Pacific was started in Western Australia in 1985 and was bought by national listed financial services player Snowball Group in 2007. Three years later, Snowball bought another WA firm, Westside Financial Services.
Shadforth was formed in 2009 when 12 adviser groups nationwide, trading under the banner Shadforth Financial Group, grouped together with a plan to list. Two WA adviser groups, Keysbrook Financial Services and Gannon Growden Schonell, were part of the original group of advisers that rebranded as Shadforth in July that year.
WHK has a similar history. Starting off in the late 1990s as Investor Group, it changed its name to reflect Williams Hatchman & Kean, the first major capital city firm to join the network.
Apart from Crowe Horwarth, which is an international brand used by the firm in Perth, Brisbane and Sydney, WHK also operates Adelaide stock-broking and financial advisory brand Prescott Securities.
Under the proposed merger of WHK and SFG, a new board of directors and management would be shared between the two businesses.
The proposal remains subject to a number of conditions, including due diligence, transaction documentation and unanimous recommendation of the WHK board.
The tie-up was first flagged in October, when SFG approached WHK with a merger-of-equals proposal.
“Having now received a proposal for consideration, it is the WHK board’s intention to evaluate the proposal and form a view on how to proceed,” the company said in a statement.
“There is no certainty that the proposal will lead to a transaction.”