Patersons Securities has bought embattled stockbroking firm Tolhurst for $1.9 million after shareholders gave their approval to the transaction.
"By bringing the two firms together we have created a fantastic platform from which to build a stockbroking business capable of attracting significant business flows and opportunities to the benefit of clients, employees and shareholders," Patersons chairman Michael Manford said yesterday.
The price was at the lower end of the $1.9 million to $2.1 million range given on 24 March.
Unlike earlier announcements, the transaction included a cash component of $500,000, which leaves Tolhurst with a 3.7 per cent stake in Patersons instead of 5.2 per cent.
Tolhurst has the right to buy additional shares up to a maximum of 31 per cent of Patersons' issued capital.
When the merger was announced in January this year, Tolhurst expected to agree on a price of $6 million to $7 million.
The lower price is the result of further trading losses, a reduction in the agreed assets to be transferred to Patersons, the inclusion of employee entitlements and the need for it to retain working capital to meet near-term operational commitments.
For the six-month period to 31 December 2008, Tolhurst reported a loss of $34.7 million, which compared to a profit of $3.8 million in the same period a year earlier. Revenues declined 39 per cent to $25.1 million.
The merged firm now has more than 290 advisers and 160,000 clients.
Patersons had previously estimated the merged company would have 400 employees and 370,000 clients, but these numbers did not take into account shared clients, a company spokesperson said.
