Financial services group IFG has agreed to buy Langtry Trust, a company based in St Helier, Jersey, in a deal that could be worth more than €16 million.
Langtry Trust, which was founded in 1975 and has around 670 clients, provides trust and company establishment and management services to predominantly private clients, mainly from the United Kingdom and continental Europe.
Its income is generated from annual administration fees charged for maintaining and operating companies and trusts.
IFG will pay an initial €5.065 million with further deferred payments of up to €11 million depending on Langtry's turnover over the next two years. All of the consideration will be paid in cash, IFG said.
The deal will be subject to shareholder approval and an egm on December 18th and consent from the Jersey financial services commission. In the year ended March 31st, 2006, Langtry Trust had turnover of just under £3.2 million and profit before tax of £1.29 million.
Net assets acquired on completion were £869,328.
Langtry Trust's business will be integrated into IFG's trustee and corporate services business.
IFG announced last Thursday, that it was in advanced discussions concerning an acquisition.
The company has placed 4.14 million shares, representing 6.02 per cent of its issued share capital, in the market at a price of €1.92 per share to raise €7.94 million.
It said the proceeds would be used for general corporate purpose, including the acquisition of Langtry Trust.
"The funds raised from equity are approximately €2.875 million in excess of the initial consideration due, so the additional funds should lower net debt levels in the interim, allowing cash flow generated from the new business to contribute towards the deferred consideration as it arises," said Anna Lalor, analyst with Goodbody Stockbrokers.
She said Langtry Trust's profit before tax in the year to March 2006 was around 35 per cent of IFG's operating profit from its international division in 2005 and it had a higher margin in that period of 40 per cent, compared to 26 per cent for the international business.
"So there is unlikely to be much in the way of cost saves. However, it will give IFG greater scale in this market," she said.
NCB said the bolt-on would be a "value-enhancing deal in the future".
IFG chief executive Mark Bourke described the deal as a perfect fit for its business.
"We are delighted with the strong demand for the IFG stock from the market, and the added scale and enhanced market position achieved in our trustee business through the purchase of this bolt-on acquisition."
