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REA Group to acquire Mortgage Choice

REA Group has entered into an agreement with Mortgage Choice to acquire 100% of outstanding shares for $1.95 cash per share in a deal worth $244 million.

Mortgage Choice has a loan book of $54 billion, settlements of $11 billion in 2020 and in the six months to December 2020 it reported net revenue of $22.2 million and net profit of $4.1 million.

The board of Mortgage Choice has unanimously recommended that shareholders vote in favour of the REA Group acquisition in the absence of a superior proposal.

Mortgage Choice chief executive Susan Mitchell confirmed the transaction would not alter Mortgage Choice's financial advice business, FinChoice.

"The REA Group transaction does not alter FinChoice's position. Independent of the acquisition, FinChoice has been working with Centrepoint Alliance to outsource back-office operations," Mitchell said.

REA said the transaction will allow it to significantly expand its offering.

"The acquisition of Mortgage Choice represents an exciting opportunity for REA to create a leading broking business. It builds on our success to date, accelerating our financial services strategy while leveraging our existing strengths and capabilities," REA Group chief executive Owen Wilson said.

Mortgage Choice chair Vicki Allen added: "This is a fantastic milestone for Mortgage Choice. Joining the REA network creates a significant opportunity to leverage its deep digital capabilities and expertise, combined with access to a large and engaged consumer audience."

The transaction is expected to be funded by an increase in REA's syndicated debt facilities. Its existing $170 million syndicated debt facility, due to expire in December 2021, is expected to be partially refinanced.

The agreement includes break fee and reverse break fee arrangements. A break fee of $2.4 million payable my Mortgage Choice to REA and a reverse break fee of $2.4 million payable from REA to Mortgage Choice.

Goldman Sachs is acting as adviser to REA.

Read more: Mortgage ChoiceREA GroupFinChoiceSusan MitchellCentrepoint AllianceGoldman SachsIndependent ofOwen WilsonVicki Allen