On Thursday, Latitude Group announced its intention to acquire Humm’s consumer business comprising of BNPL, Instalments and Cards businesses for approximately $335 million.
The deal comprising of 150 million Latitude shares and $35 million cash remains subject to the parties completing due diligence, although Latitude currently expects annualised combined synergies and cash earnings from the acquisition of Humm’s consumer business to exceed $100 million pre-tax in full year 2023. The transaction is also expected to be double-digit EPS accretive for Latitude assuming full run-rate synergies.
Humm’s consumer business at 30 June 2021 had approximately $1.8 billion of net receivables and $152 million of net tangible assets. The deal would create a combined Latitude Group with more than $8 billion of receivables and over five million customers, with 70,000-plus merchants.
Latitude says the transaction will cement its position as the leading instalments and consumer lending business in Australia and New Zealand. Humm’s consumer business has a leading capability in big and small ticket BNPL and a significant merchant base to accelerate Latitude’s BNPL strategy. Humm’s consumer business includes its Australia and New Zealand Instalments and Cards business which will provide additional scale to Latitude’s instalments business at minimal marginal cost. Latitude will consolidate its LatitudePay BNPL business under the current brand and Q2 Cloud Lending platform of Humm’s consumer business.
Latitude Managing Director and Group CEO Ahmed Fahour said: "Humm's consumer business is highly accretive to Latitude’s shareholders. The proposed Transaction would enable us to accelerate the deployment of BNPL and instalment solutions for our customers and merchant partners in Australia/New Zealand and accelerate our growth in our international markets. It would also realise highly deliverable synergies which will enhance our financial performance and create significant shareholder value.”
The parties expect to sign documents by the end of January 2022. Completion of the deal will be subject to regulatory, shareholder and board approvals, with both parties aiming to close the transaction before 30 June 2022.