Latitude Financial Services told it had to lift bid to win Humm approval

Latitude Financial Services chief executive Ahmed Fahour. Picture: NCA NewsWire / Ian Currie

Latitude Financial Services would have had to recut its bid for Humm’s consumer finance unit to $300m cash to win shareholder approval, according to market sources.

It is understood that Latitude management, led by Ahmed Fahour, was told this was the only way the non-bank lender would gain enough support at a vote on June 23.

Humm announced on Friday that the two companies had agreed to terminate the proposed sale of Humm Consumer Finance, in a move earlier flagged by DataRoom.

Latitude announced in February that it had agreed to buy the business for $35m in cash and 150 million Latitude shares, valuing the deal at $335m as of December 31 when its shares were at $2.

But as of Thursday, the transaction was valued at about $245m, with Latitude’s share price closing at $1.40 amid a broad Australian sharemarket sell-off.

The unit, which is involved in buy now, pay later lending, has gone from making about $50m a year to losing money amid a major crisis across the BNPL sector.

Humm’s founder and former chairman Andrew Abercrombie had been attempting to block the sale, urging investors not to approve the transaction in the vote on June 23 and recently increasing his shareholding to 22.5 per cent.

For the deal to have proceeded, Humm needed the approval of more than 50 per cent of shareholder votes cast.

Some believe that Latitude would have been willing to offer $200m cash for the business, given its deteriorating performance.

It is understood that Mr Abercrombie has been working behind the scenes with Resimac director and 62 per cent shareholder Duncan Saville, who owns just under 5 per cent of Humm.

Humm’s Commercial Finance unit would be a good strategic fit for non-bank lender Resimac, and only time will tell whether it surfaces as buyer of the profitable unit where Mr Abercrombie offers his support.

Mr Saville is not the only high-profile investor to have been snapping up stakes in companies across the ASX.

Andrew Forrest’s private investment company Tattarang has emerged as a 17 per cent shareholder of listed beauty products company BWX, which owns skin care brands such as Sukin.

The Fortescue Metals boss also lifted his interest in the Australian Agricultural Company from 7.9 per cent to 17.41 per cent.

He also has stakes in Bega Cheese, owns all of rural apparel and footwear company RM Williams and has owned shares in Huon Aquaculture, which was sold to JBS.