25 May 2012

Westhouse agrees £1.9m Arbuthnot Securities deal

18/11/2011 Miles Nolan

Having announced talks earlier in the month, institutional stockbroker Westhouse (WHL) has now exchanged contracts for the purchase of rival Arbuthnot Securities.

Westhouse is paying £1 million in cash, 1.25 million new shares in AIM listed Westhouse, and a further tranche of the existing Perpetual Convertible Loan notes. The shares will be subject to a lock-in period of 12 months, with the deal also subject to FSA approval.

In the year to December 2010, the Arbuthnot Securities business achieved sales of £17 million and pre-tax profits of £1 million, net assets also amounted to £6.4 million. With market conditions deteriorating, in the six months to June it recorded revenues of £4 million, and a significant loss of £3.4 million - net assets fell significantly to £3.5 million.

The combined group, with over 90 clients, will be the number 1 ranked stockbroker to AIM companies. Westhouse argues the rationale is the creation of a larger entity, which will have wider sector expertise as well as an increased sales and trading function.

It states the deal outlines its plans to consolidate what is becoming a rapidly fragmented market. Earlier this week Altium unveiled it was planning to close its securities arm, due to their being no obvious signs of an upturn in the small to mid-cap market. The decision is subject to a statutory consultation period, but effects 30 jobs. Several other brokers have also been shedding jobs amid a dearth of primary and secondary business.

Tags: AIM market, Arbuthnot Securities, Broker consolidation, Number 1 on AIM, Westhouse Securities

Sector: Financial Services

Companies: Westhouse Holdings

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