Close AM makes £26m offer for Cavanagh

Close Asset Management has made a 220p per share cash offer for AIM-listed IFA Cavanagh Group.

This values the entire issued and to be issued share capital of Cavanagh at approximately £26.2m, net of expected share option proceeds, or 1.7% of Cavanagh's revenue-generating client assets.

The proposed acquisition of Cavanagh is in line with Close Asset Management's strategy to create a high growth wealth and asset management business in the UK.

It follows the acquisition by the Close Brothers' subsidiary of Chartwell Group in September 2010 and Allenbridge Group in February 2011.

Close has received irrevocable undertakings to accept or procure the acceptance of the offer in respect of:

• 4,169,893 Cavanagh shares in aggregate in which the Cavanagh directors have a beneficial interest, representing approximately 36% of the issued share capital of Cavanagh; and
• 1,627,595 Cavanagh shares in aggregate in which certain other shareholders have a beneficial interest, representing approximately 14% of the issued share capital of Cavanagh.

In addition, the Cavanagh management team of Andrew Fay, Simon Redgrove, Neill Millard and Charles Gillespie have each agreed, together with certain other employees, to exchange 50% of the consideration to which they are entitled under the terms of the offer, net of tax (in the case of certain individuals) and certain other financial commitments, for Close Brothers' shares.

The offer is conditional, among other things, upon the passing of a resolution at a general meeting of Cavanagh and regulatory approval from the FSA. However, the independent directors intend to recommend the offer to shareholders.

Preben Prebensen, chief executive of Close Brothers, says: "This acquisition represents a further step in the execution of our strategy to build a high quality private client offering and to become a leader in UK wealth and asset management. It will significantly extend our asset base and client reach and our capabilities in servicing advice-seeking clients. We look forward to welcoming the Cavanagh team into the group."

Paul Sinnett, chairman of Cavanagh adds: "The price offered by Close reflects the value created over the past 15 years through the dedication of the staff and management team. The acquisition of Cavanagh by Close represents the logical next step in the continued development of the Cavanagh business and will benefit both our clients and employees. The management team look forward to working with their Close Asset Management colleagues in continuing to grow the business in the future."

Cavanagh has eight offices nationwide and approximately 60 advisers. Its private client and corporate assets are in excess of £2bn, with £1.5bn of these revenue-generating.

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"The price offered by Close reflects the value created over the past 15 years through the dedication of the staff and management team. The acquisition of Cavanagh by Close represents the logical next step in the continued development of the Cavanagh business and will benefit both our clients and employees. The management team look forward to working with their Close Asset Management colleagues in continuing to grow the business in the future."