Heartland’s $154m deal in Australia

Heartland Group Holdings has reached a conditional agreement to buy an Australian stock financing business for A$143 million ($154.4m) plus a potential A$11m top-up if the business meets performance measures.

The NZX-listed company, which also owns Heartland Bank and a transtasman reverse mortgage business, said it had signed documentation to acquire StockCo Holdings 2 Pty from its shareholders.

The deal also includes Heartland acquiring all the shares in StockCo Australian Management Pty, which together with StockCo Holdings 2 Pty makes up a business called StockCo Australia.

StockCo Australia specialises in livestock finance for cattle and sheep farmers in Australia and has total assets of A$341m in a market estimated to be worth A$7 billion.

The transaction is expected to add A$10m-$12m in annual net profit to Heartland’s bottom line before accounting for the cost of debt funding for the acquisition.

The acquisition is subject to Heartland getting a new operational funding facility as well as other conditions it did not detail.

“Heartland’s intention is to fund the total acquisition cost in the short term through new debt facilities provided by a major Australasian financial institution.”

The deal, which is is expected to be completed by the end of May, includes Elders Rural Services continuing as a distribution partner for the finance products to its clients for an initial five-year term.

Heartland said given the timing of the acquisition, there would be no change to its market guidance for its June 30 financial year.

Heartland shares ended the day up 3c to $2.28 on the announcement and are up almost 29 per cent over the past year.