HUB24 (ASX: HUB) to acquire myprosperity; shares tank

Highlights:

• On Wednesday, HUB24 Limited (ASX:HUB) announced inking a deal with myprosperity Pty Ltd for HUB to acquire 100% of the ordinary securities of myprosperity.
• As per the transaction details, myprosperity stakeholders will obtain a total consideration of AU$40 million of HUB’s ordinary securities.
• The transaction is anticipated to be underlying EBITDA positive in FY25.

The investment and superannuation platform services provider HUB24 Limited (ASX: HUB) decreased by 1.722% and was trading at AU$27.390 on Wednesday, 3 May 2023, at 12:05 pm AEST after it announced that it had inked a deal with myprosperity Pty Ltd for HUB to acquire 100% of the ordinary securities of myprosperity.

Let’s get apprised of HUB’s latest inked agreement with myprosperity in detail.

On Wednesday, the company notified the market it had inked a deal with the leading provider of client portals for accountants and financial advisers, myprosperity, to acquire its complete ordinary securities. This acquisition is anticipated to deliver long-term stakeholder value by expediating HUB’s platform of the future strategy, backing its present growth trajectory.

The distinctive ability presented by myprosperity with HUB will cement the company’s stance as a leading source of incorporated platforms, tech, and data solutions for finance-related professionals.

The amalgamation of myprosperity, along with HUB custodial and non-custodial platforms, is intended at first, which will be followed by the growth of a single client portal for the complete HUB group portfolio of products and services. It is further anticipated to expand HUB’s market-leading stance and provide elevated consumer advocacy and fresh prospects to further grow market share throughout HUB.

It is planned that myprosperity will run as a single business unit within HUB group under the myprosperity brand and leadership team, at the same time benefitting from HUB’s technology infrastructure and shared services.

HUB and myprosperity’s transaction details

As per the transaction details, myprosperity stakeholders will obtain a total consideration of AU$40 million of HUB’s ordinary securities issued at 30-day VWAP, being AU$27.63 and 1.4 million securities issued.

Apart from that, up to an additional AU$11.5 million in HUB ordinary securities will be received contingent on a few terms and conditions and performance hurdles being met gradually across the upcoming three years of time. It will be 100% attained on successful incorporation of myprosperity functionality into the HUB platform, Class software, NowInfinity, and HUBconnect offers and revenue synergy goals of AU$7.2 million in the fiscal year 2024, rising to AU$21.2 million in the fiscal year 2026.

This transaction is anticipated to be underlying EBITDA positive in the fiscal year 2025 and earnings a security neutral in the fiscal year 2026, and earnings a security accretive in the fiscal year 2027 (between 4% to 5%). The transaction costs incurred during FY23 are anticipated to reach nearly AU$400K, along with minimal implementation costs. The target conclusion date is before 30 June this year.