Why Australian Finance Group (ASX:AFG) shares are falling today

Shares in the Aussie mortgage broker are under pressure right now…

| More on:
white arrow dropping down representing the 10 most shorted shares on the ASX

Image source: Getty Images

Australian Finance Group Ltd (ASX: AFG) shares have started Friday’s trade under pressure. The Aussie mortgage broker’s share price is down more than 2% after an early morning market update.

Why are Australian Finance Group shares under pressure?

The big news this morning was a delay in its proposed merger with Connective Group. The deal to create Australia’s largest mortgage aggregator with nearly 40% of the broking market was first announced back in August 2019.

Australian Competition and Consumer Commission (ACCC) approval in June 2020 sent Australian Finance Group shares soaring. However, this morning’s update indicates that the proposed merger might be on ice for the time being.

AFG needed to achieve two key things by 31 August 2021 – ACCC approval and court validation of the transaction. It got regulatory approval but a court decision has not been reached despite hearings concluding in March 2020.

According to today’s release, the Australian Finance Group has “concluded that it is not likely that the merger will be able to complete prior to the expiry of the Implementation Deed”.

AFG CEO David Baily said, “The extraordinary length of time that the judgement has taken has blocked our ability to complete this transaction”.

“Disappointingly, this means the merger is not likely to proceed at this time”, he added. It seems as though investors are similarly disappointed by the news.

Australian Finance Group shares have dipped lower on the news, but it isn’t all doom and gloom. Mr Bailey noted, “The two businesses are very complementary, and we remain convinced the merger would deliver benefits to our brokers and customers”.

That provides some hope of a future deal between AFG and Connective, even if the current Implementation Deed expires. Despite today’s movements, Australian Finance Group shares remain up 52.3% in the last 12 months with a $700 million market capitalisation.

Should you invest $1,000 in Australian Financial Group right now?

Before you consider Australian Financial Group, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Australian Financial Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Mergers & Acquisitions

Businessman outside jumps in the air
Mergers & Acquisitions

Infomedia share price leaps higher on new unsolicited takeover proposal 

The ASX tech share has received two separate takeover offers this month.

Read more »

Codan share price A dismayed kid dressed as a scientist stands with his back to a rocket crashed into the ground
Mergers & Acquisitions

Appen share price crashes 25% after Telus withdraws takeover offer

The Appen rocketship ran out of fuel very quickly. Here's why...

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Mergers & Acquisitions

Appen share price on watch amid takeover offer collapse

Appen shares could be in for a rough ride on Friday...

Read more »

A woman crosses her hands in front of her body in a defensive stance indicating a trading halt
Mergers & Acquisitions

Action aplenty: Here’s why the Appen share price has now been halted

Appen shares have been halted abruptly this afternoon...

Read more »

A couple sit at opposite ends of a leather couch in their loungeroom representing demergers of ASX shares
Mergers & Acquisitions

How do ASX shares typically perform following a demerger?

Do ASX demergers ever actually work out for investors?

Read more »

Two men in business attire play chess.
Mergers & Acquisitions

Will the CA$8.1 billion Telus International up its bid for ASX-listed Appen?

What's the chances of Appen getting a better deal?

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Appen share price rockets 35% on Telus takeover approach

Appen shares are rocketing on Thursday after receiving a takeover approach...

Read more »

A man in a suit looks surprised as he looks through binoculars.
Mergers & Acquisitions

Appen share price on watch amid $1.2 billion takeover bid

Appen gets lobbed a $1.2 billion buyout, but is it enough?

Read more »