Pacific Mortgage Group -- parent of Mortgage Architects
Inc. and myNext Mortgage -- has now taken its bid for Invis directly to the company’s shareholders, a move meant to circumvent board opposition.
“We felt that there were some misunderstandings about our offer, and we wanted to set the record straight,” Alex Haditaghi
, CEO of Pacific Mortgage Group Inc., told MortgageBrokerNews.ca
, just after the Monday announcement. “We believe that it is an amazing offer for shareholders of both companies and brokers and agents of both companies. I think it will create a more financially profitable company, better able to compete with the big banks and drive business to the broker channel.”
On Monday, Pacific announced it had sent a binding letter of intent to the members of the board of Invis Inc. on March 11. The deal includes a cash offer of $9M plus for equity ownership of the brokerage operation and an equity incentive package for all Invis and Mortgage Intelligence
mortgage brokers and agents. The offer would give those industry professionals a stake in the combined organization.
“All brokers will have ownership in the company,” said Haditaghi, “and they’ll not only own shares in a brokerage but a lender.”
The company must first win approval from Invis shareholders for an acquisition that would create one of the broker channel’s biggest players.
In a released statement, Cameron Strong, executive vice-president and CFO of INVIS stated “Invis has rejected this offer as unacceptable, and is not in negotiations with Pacific Mortgage Group.”
The move would not only lead to greater economies of scale by centralizing back-office functions, said Haditaghi, but win the combined entity $15 billion in new annual mortgage volumes.
“Pacific Mortgage believes that the combined entity would have the critical mass to realize substantive revenue growth…materially improving bottom line profitability for its owners,” reads Monday’s press statement. The “vision is to combine the mortgage loan originating strength of its mortgage brokerages and centralize back-office service operations.”
The overriding result may be to create the industry’s biggest triple threat -- Canada's leading independent residential mortgage origination, funding and servicing business. Pacific’s lender, myNext Mortgage, would figure prominently in the new company as well as a new mortgage-servicing business. Other opportunities are expected to arise from the sheer heft of the new company.
Pacific has already been in expansion mode. Last week, it announced its high-ratio lender would move to offer “prime conventional mortgages” through its Mortgage Architects
“Our intention is to drive critical volume through the lending operations and to provide ownership of the entire business to the brokerage distribution channel,” says Monday’s release. “The management of Pacific Mortgage strongly believes that this transaction will be transformational to both organizations and will generate significant shareholder value.
It was, in fact, the company’s intention to continue to communicate privately with Invis’s board. But those talks appear to have failed. “I feel compelled that all shareholders should understand the context of our offer,” Haditaghi told MortgageBrokerNews.ca.
That decision now rests with shareholders, with Haditaghi hoping for a final vote as early as the end of April.