CEO of potential merger talks on deal

​Yellow Brick Road has just put the brakes on rampant speculation as to which company it could be taking over – and we have an exclusive interview with that company's CEO



Vow Financial chief executive Tim Brown has confirmed Yellow Brick Road's ASX report regarding market speculation.

Yellow Brick Road took to the ASX late this morning to put the brakes on rampant speculation as to which company it could be taking over.
On Friday, six weeks after YBR told investors it had entered into three exclusivity agreements on potential unnamed acquisitions, chief financial officer Richard Shaw announced on the ASX that nothing is settled – but they are in talks with mortgage broker aggregation group Vow Financial.
“Yellow Brick Road Holdings Limited (the Company) is aware of media speculation concerning potential acquisitions by the Company of certain named companies,” said Shaw.
“The Company is in discussions with the board of Vow Financial Holdings Pty Limited. At this time, no binding agreement has been entered into, other than the parties being in exclusive arrangements.”

Brown confirmed to Australian Broker the company was in discussions with YBR, but said until Vow gets a final offer he cannot say much more.

The CEO does not know when such a final offer is likely to come. “At this stage we’re still waiting for confirmation.

“Any business looking to consolidate or merge is looking for scale – with it comes better rates, better commissions, all the better opportunities that come with being a bigger business.”

Vow has $19.2 billion worth of loans under management and has partnerships with more than 700 mortgage and finance brokers.
When YBR chief executive Matt Lawler announced the company’s March quarter results last week, he said the main focus of the quarter had been to branch and client activity and progressing acquisitions.  

Despite executing its first major digital campaign, the fast-growing company is still operating at a loss. It reported a net operating deficit of $1.11 million, which is still a 17% improvement on the previous quarter.

The campaign, which started in February and focused on busting mortgage myths, resulted in “record lead flows for the months of February and March”, Lawler said.

Receipts from branch customers increased on last quarter by 2% to $5.04 million – a 44% increase on the same quarter last year.

The loan book reached $2.44 billion at the end of the quarter, up from $2.22 billion from the quarter before.

Lawler noted the fourth quarter is traditionally the most productive part of the year, so the company anticipates “significantly” improving its quarterly cash flow position.

Finalisation of an acquisition such as Vow would be likely to greatly boost YBR from its current share price of $0.605.

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