Wealth management firm pulls out of takeover

WEALTH management firm AFH has pulled out of making an offer for financial advisors Lighthouse just two weeks after its initial approach.

AFH had made an indicative offer of 13p per share, which valued Lighthouse at £13.4m and was a 27% premium on its closing share price on March 8. It sought a deal that would have been paid by at least 50% in cash and the remainder in new shares in AFH or convertible loan notes in AFH.

The offer was rejected by Lighthouse’s directors, while the takeover target’s share price rose by one-third to reach 15.5p on March 18.

Bromsgrove-based AFH has now reviewed its options and decided not to pursue its interest in Lighthouse.

Alan Hudson, chief executive of AFH, said: “We are naturally disappointed with the reaction of Lighthouse to our indicative proposal which included a mix and match structure for individual Lighthouse shareholders.

“AFH, with its extensive track record of M&A to date, continues to progress its stated organic and acquisitive growth strategy and looks forward to updating the market in due course.”

In a statement to the stock market, AFH explained the three main reasons for its decision not to submit a revised offer.

It said: “The company’s indicative offer recognised Lighthouse’s limited growth prospects under its current strategy and as reflected in market expectations, its inability to make further distributions or other non-trading payments from its regulated subsidiaries without FCA consent and the acknowledgment that approximately 50% of its cash was required to be retained for regulatory purposes.”