Listed property valuation firm Landmark White will acquire rival firm MVS National for $35 million in a major consolidation play in the sector.
The deal, which LMW expects to deliver a 50 per cent boost to earnings per share this financial year, is subject to shareholder support and the firm undertaking a successful $20.5 million capital raising.
The acquisition, which was struck on an earnings multiple of 4.5 will add 85 valuers to LMW's staff of 250 and expand its revenue stream to incorporate government and statutory valuation work.
"The merger creates the opportunity for the expansion of valuation services across private, corporate and government sectors within the market. Combining the businesses will allow us to build on the success and strength of both organisations, enhancing outcomes for all of our stakeholders," said LMW CEO Chris Coonan.
Tony Onsley, MVS chief executive, said its valuers and customers would benefit from the greater scale and national capability as part of a bigger firm.
"Importantly, MVS's current owners will become shareholders in LMW as part of the merger transaction, and form part of the leadership and management going forward," he said.
The acquisition will be funded by $16 million in cash and $7.3 million in scrip with completion of the acquisition and issuing of new shares due to occur on May 31. The remaining $11.7 million will be paid in late 2020 via equity to MVS shareholders and is subject to performance hurdles being met in 2018, 2019 and 2020.
According to Greville Pabst, executive chairman of WBP Property Group, industry consolidation is being driven by the scale required to fund technology platforms and the cost of professional indemnity insurance.
Mr Pabst told The Australian Financial Review in 2015 he expected the industry consolidate from 10 major groups to four or five.
