Stockbrokers FinnCap and Cenkos agree £43m merger deal
The merged firm will have more than 210 retained company clients and employ about 230 people in the UK.
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Your support makes all the difference.City stockbrokers FinnCap and Cenkos have agreed an all-share £43 million merger to create a group with combined revenues of more than £50 million.
The merged firm will have over 210 retained company clients and employ about 230 people in the UK.
It comes after talks broke down late last year over a takeover of FinnCap by Panmure Gordon.
The sector is battling amid a dearth of deals and the need to make savings in the face of slowing corporate activity.
FinnCap had a tough 2022, with shares hit and its founder and boss of 24 years, Sam Smith, stepping down in the summer.
The pair said: “The FinnCap board and the Cenkos board are mindful of the market challenges faced by the broking sector in recent years and that as this highly fragmented market is becoming increasingly competitive, scale is becoming increasingly important.”
Cenkos has a market value of about £22 million and FinnCap was valued at £21 million at the market close on Wednesday.
The pair signalled plans to cut costs following the deal and cautioned over role cuts, particularly in central and support functions.
They said: “There are potentially significant cost synergies from common systems, processes, regulatory overlap and infrastructure.”
The two firms said there are likely to be “areas of duplicative or inefficient spending” where savings can be made.
FinnCap said a review of the two firms’ costs after the tie-up would likely see the combined workforce trimmed, adding the “number of affected individuals could potentially, depending on the outcome of this review, be material”.
Some of this would be achieved through natural staff turnover, but “rationalisation” is likely within central and support functions across, it said.
John Farrugia, co-chief executive of FinnCap, who would become co-chief executive of the combined group, said: “In Cenkos we have found a partner who shares the same vision, desire and drive to create one of the leading financial services advisory firms focused on the mid-market.
“With our collective strength in capital markets, M&A, debt advisory and private growth, we believe that we are able to provide an unrivalled level of service to all our current and prospective clients.”