Bid war erupts over RHG: Pepper steps up to the plate

by AB11 Jul 2013

Pepper has officially out-bid Resimac in an effort to acquire 100% of the issued share capital of RHG, following an announcement late yesterday.

The specialist mortgage lender says that, under the scheme, Pepper would acquire RHG for cash considerations of 46.0 cents per share – or 1.9 cents higher than Resimac’s offer of 44.1 cents per share.

Furthermore, the purchase price would not be reduced by the proposed fully-franked dividend of 3 cents per share announced by RHG on Monday. As a result, RHG shareholders who are on the register would receive cash payments totalling 49.0 cents per share.

This is 1.9 cents per share higher than the amount they would receive under the scheme offered on Monday by the Resimac Syndicate.

"The RHG acquisition will be immediately earnings accretive for Pepper and will further expand our activities into select segments of the prime residential lending market, complementing our track record as one of Australia's leading specialist residential mortgage lenders,” says Pepper CEO, Patrick Tuttle.

"Prime residential lending is a natural extension to Pepper's existing range of lending products, which includes specialist residential mortgages, commercial auto loans and equipment leasing and will better position us as a ‘one stop shop’ product provider to our loyal broker and white-label distribution partners".

“The acquisition of RHG Limited and its residential mortgage portfolio is highly strategic for the Pepper Group,” says Pepper executive chairman, Mike Culhane, “leveraging our proven track record as Australia's leading purchaser of whole loan assets over the past 3 years.”

Tuttle adds that the legacy RHG mortgage book will ‘complement’ Pepper’s recent acquisition of GE Capital’s home lending business in Australia and New Zealand.