Rival bidder COG withdraws ‘superior’ Diverger bid

With Count’s acquisition of Diverger (DVR) nearing completion, rival bidder COG Financial Services Limited has withdrawn its “superior proposal” made last month.

In an ASX announcement on 15 November, COG confirmed the withdrawal of its non-binding indicative offer for a scheme of arrangement to merge with Diverger.

The financial services firm still describes its offer as a “superior proposal” that is more advantageous to both Diverger and COG’s separate shareholders. 

“But it has formed the view that DVR’s major shareholders who could control the vote on the offer, in the absence of any public statements to the contrary, are unlikely to vote in favour of COG’s offer,” the statement continued.

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COG confirmed its right to re-engage if Count’s acquisition of Diverger were to change.

Initially made on 30 October, Diverger confirmed recent media speculation at the time that COG made a non-binding indicative proposal to acquire 100 per cent of the firm.

The offer proposed to acquire all of the Diverger shares on issue for $1.41 per share with $0.68 in cash per Diverger share (48 per cent) and $0.73 in COG shares (52 per cent).

In the same week, Count CEO Hugh Humphrey told Money Management that its acquisition of Diverger was nearing completion with two court hearings scheduled and it is expected to complete on 27 February.

This was despite major Diverger shareholder DMX Asset Management’s unsupportive stance on the offer. The firm previously called it a “farcical” transaction and said it undervalued the fair value of Diverger.

DMX reaffirmed its view in a recent investor update: “We believe that this bid by COG at $1.41 validates our view (that we had articulated to the DVR board) that the Count offer at $1.14 materially undervalues DVR and should not be accepted.

“During November we have also seen DVR’s major shareholder HUB, acquire DVR shares on market at $1.26. Wenow struggle to see how the independent expert appointed to assess the fairness of the Count Scheme can recommend that Count offer at $1.14 as being fair to DVR shareholders, given DVRs major shareholder is happy to pay an amount ~10% higher to acquire more DVR shares on market.”

Diverger still states it favours the Count offer, with Humphrey saying Count has a matching right to match the offer of any superior bids. 

Humphrey said: “The agreed deal is unanimously supported by all of their directors including by HUB24 who is a major shareholder in favour of the transaction. In the event of a superior proposal, we do have matching rights over that.”

In Count’s 2023 annual general meeting on 14 November, Humphrey described the deal as “highly complementary” to the firm’s strategic pillars and presents transformational opportunities. 

“We remain focused on closing out the transaction, and Count is on track in progressing with the various documentation and procedural requirements.

“We believe that the combined business of Diverger and Count will deliver a strong outcome for shareholders and are confident that the combined business will unlock meaningful synergies, create economies of scale and deliver potential growth opportunities,” the CEO concluded. 

Humphrey also told Money Management that the Diverger acquisition is “not the end” of the firm’s acquisition plans.

“We have left headroom in the business to make other acquisitions. We have been doing one every five weeks at the current rate.

“Our firepower will be the same [after the Diverger deal]. It won’t change our M&A activity. We are positioned well to explore ongoing opportunities. We have the cash and lending facility to continue with acquisitions and have a significant pipeline,” he shared.