Euroz has snapped up rival Perth broker Blackswan Equities to bolster its exposure to wealth management, as smaller brokers continue to consolidate amid tough conditions.
Late on Wednesday night, Euroz told the stock exchange it would buy Blackswan for up to 5.2 million shares, subject to due diligence between the parties.
Prior to the deal, Euroz was trading at $1.295, valuing the deal at $6.6 million. In early trade, Euroz rose 2.7 per cent to $1.33.
Euroz, which also has an institutional trading arm, said Blackswan would nearly double the size of its private client dealing desk and form a “significantly stronger distribution platform”.
Euroz also does corporate deals like takeovers and capital raisings, and funds management.
“Blackswan have an excellent reputation as a strong private client and portfolio administration business and their expertise in this area will enhance our wealth management capabilities,” said Euroz co-founder and chairman Andrew McKenzie.
“(It) will provide solid revenue, cost and operational synergies for our combined group.”
The deal signals smaller brokers are likely to continue to merge amid lower trading levels since 2009 and higher costs, leading several firms into the red.
Rival Perth brokers CPS Securities and Indian Ocean Capital last year joined up following a spate of tie-ups on the east coast in recent years, including EL & C Baillieu acquiring FW Holst, Wilson HTM taking over Investorfirst and BBY buying Cameron Stockbrokers and StoneBridge. Blackswan chairman Tim Lyons said Euroz’s “corporate brand” would provide opportunities to its “significant” networks of high net worth clients.
Blackswan has $1.4 billion of funds under advice in excess of $1.4 billion.
“We are very confident in our ability to integrate the two firms and cultures into a combined powerhouse in the Western Australian market,” he said.