Challenger buys Associated Planners for $100m

Challenger Financial Services Group (CFSG) today announced its takeover of dealer group Associated Planners Financial Services (APFS) for $100 million in a deal that will see it merge with Challenger-owned Garrisons Financial Planning.

The deal, which has been approved by the APFS board and is now subject to APFS shareholder approval, will see Challenger fully acquire the dealer firm on a scrip for scrip basis and ends Zurich Financial Services’ association with APFS - Zurich was the largest single shareholder with a 30 per cent stake in the group.

The pair have entered into a Merger Implementation Agreement (MIA) with a meeting to vote on the matter scheduled for late June or early July.

“Our business is unusual as our members have the final say, so it needs to go to shareholders for acceptance despite the board already signing off with a recommendation,” APFS managing director Ray Miles says.

However according to APFS chairman Richard Thomas the board had discussed the proposed deal with a number of its major shareholders and that they had agreed in the absence of a superior offer to support the Challenger offer.

Miles will be appointed managing director of the combined group, while deputy managing director Andrew Creaser and Garrison’s acting head Jim McKay will assume joint managing director roles.

Challenger chief executive Chris Cuffe says “Financial planning at a dealer level is a scale business. Challenger could continue to grow its existing business organically but we believe that the combination of Associated Planners and Garrisons would enable us to significantly leap-frog what could otherwise be achieved”.

The proposed merger is subject to several other conditions, including the obtaining of court orders to approve the deal, Challenger shares being accepted for quotation on the Australian Stock Exchange (ASX) along with the MIA not being terminated prior to Court approval.

Miles adds that the two groups have developed a ‘Charter of Independence’ to ensure APFS planners retain their position as non-aligned advisers.

“Challenger recognises the need for the financial planning process to be free from commercial influences that may result in suboptimal outcomes for clients,” Challenger funds management and distribution general manager Rob Adams says.

Despite its agreement to sell its 30 per cent, Zurich Australia Financial Services chief executive John Butler says the group remains committed to its intermediary partnerships and will continue to have a close working relationship with APFS member firms.