Financial firms contemplate merger
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After recently cutting jobs to save costs, accounting firm WHK Group is considering a $320 million merger proposal from wealth management firm SFG Australia.
As it posted a 22 per cent fall in first half profit, WHK received an indicative offer from SFG that could create a merged entity with more than $17 billion in funds under management.
SFG, an advisor to the wealthy, has been in talks with WHK, an accountant for small businesses and high worth individuals, since October 2012.
The suitor has proposed a share-based merger that would leave WHK shareholders with a 42 per cent interest in a newly merged business.
SFG's offer implies a value of almost $1.21 for each WHK share, above their previous closing price of $1.06.
WHK's board are now assessing the offer, and said there was no guarantee of a transaction.
Consideration will be given to the potential value of the company's recent streamlining measures, which are expected to start delivering financial benefits in the second half of the 2012/13 financial year.
The company has cut 123 jobs and introduced cost management measures as part of the program.
Redundancy costs were one of the reasons given by WHK for its net profit falling to $5.2 million in the six months to December, from $6.7 million in the previous corresponding period.