OneSavings Bank, a specialist lender, has proposed to acquire specialist mortgage bank Charter Court Financial in an all-stock transaction worth £1.6bn to create a major specialist mortgage lender in the UK.
As per the agreed terms, OneSavings Bank will acquire all the shares of Charter Court Financial by issuing 0.8253 of its shares for each share of the latter.
Charter Court Financial operates through three brands – Charter Savings Bank, Precise Mortgages and Exact Mortgage Experts.
Charter Savings Bank is an online bank which offers savings products through its website. Precise Mortgages offers residential and buy-to-let mortgages in addition to bridging and second charge loans to borrowers.
Exact Mortgage Experts, on the other hand, administers mortgages originated by Precise Mortgages and certain third parties. It provides portfolio pricing services and credit consultancy to institutional clients.
Charter Court Financial reported a growth of 40% in its profit before tax of £158.2m for the full year 2018 compared to the previous reported year.
OneSavings Bank is engaged in offering buy-to-let mortgages, commercial mortgages, residential development loans and funding lines among other products.
Upon completion of the merger, the OneSavings Bank’s current shareholders will own about 55% stake in the combined company while the remaining stake of around 45% will be held by Charter Court. OneSavings Bank CEO Andy Golding is set to become the CEO of the combined group post-merger.
Boards of both the companies are of the opinion that the merger will potentially create material shareholder value while having a compelling strategic and financial rationale. Further, the merger is expected to create a highly compelling opportunity across multiple aspects.
The transaction will help the two companies benefit from their complementary strengths, thereby creating a comprehensive and diversified platform across brands, product capabilities and team cultures.
It will also enable the companies to leverage complementary underwriting capabilities to improve the customer proposition while helping them create a well-balanced, strong and diversified retail-wholesale funding platform.
The proposed merger will be subject to shareholder approvals and approvals from relevant UK regulatory authorities.