Centrepoint Alliance shareholders have approved the merger with Professional Investment Holdings (PIH).

Chairman Rick Nelson told that company’s AGM last week the takeover will help the company diversify its business and create value for shareholders.

The takeover will drive up the price-to-earnings ratio of the company while also improving the net profit after tax, he says.

Mr Nelson pointed out there are risks involved with the merger, including  PIH’s relationship with the Australian Securities and Investments Commission (ASIC) and liabilities stemming from historic advice by the dealer group’s financial advisers.

PIH has been on ASIC’s radar for its advice on the failed Westpoint investments.

It has also been heavily involved in selling agribusiness managed investments schemes to clients, especially Great Southern which went into liquidation last year.

As Centrepoint noted in its AGM papers, the merger risks include claims and litigation stemming from this advice, brand damage, loss of financial advisers, dependence on product providers, reliance on revenue generated by the advisers and regulatory changes.  

But approval for the takeover was passed by a considerable majority with only 9000 shareholders voting against the proposal. However, 24,000 shareholders did abstain.

Subject to PIH shareholders approving the deal, Centrepoint shareholders will own 25% of the new merged company with PIH shareholders holding the remaining shares.

The merged company would still have Tony Robinson as MD, and Mr Nelson will remain in his present role until an independent chairman is appointed.