Ex-Humm chair Andrew Abercrombie builds stake to 22.5pc in bid to block sale to Latitude

Former Humm chairman Andrew Abercrombie is increasing his holding in the company as he agitates against plans to sell its consumer finance division to Latitude Financial.

Former Humm chairman Andrew Abercrombie: ‘Momentum is quickly building as more and more Humm shareholders realise what a dud deal this is.’ Picture: AAP

Former Humm chairman Andrew Abercrombie is increasing his holding in the company as he agitates against plans from the board to sell its consumer finance division to Latitude Financial.

Mr Abercrombie, who was already the largest shareholder and remains on the board of the company previously called FlexiGroup, has increased his holding in Humm to 22.5 per cent.

That follows the purchase of 2.7 million shares – for around $2m – earlier this month. That lifted Mr Abercrombie’s stake from 19.66 per cent to 20.7 per cent, according to a notice on the ASX on Monday.

Mr Abercrombie, on Thursday, said he was increasing his stake to “leave no one in any doubt that I believe this company has a bright future and should not be sold cheaply to Latitude”.

Humm has signed a deal to sell its consumer finance business to Latitude for some $300m – 150 million Latitude shares and $35m in cash. However, it needs the approval of shareholders.

In an extraordinary move, the Humm majority board last Monday warned its buy now, pay later unit had been unprofitable in the four months to April 30, and urged shareholders to accept Latitude’s takeover offer.

But Mr Abercrombie is not the only one opposing the deal at its current price, with Leyland Private Asset Management, which holds about 1.5 per cent of Humm, also sceptical.

“Shareholders are better off keeping the consumer finance business within Humm,” fund manager Charles Leyland said.

“A lot of buy now, pay later businesses won’t be around in the next 12 to 18 months, whereas Humm is profitable and can ride out these fluctuations.”

Shares in BNPL firms have fallen as much as 75 per cent in recent times as the once-hot sector faced small profits, tough competition and the increasing likelihood of tougher regulations.

Mr Leyland said the deal as currently structured was too cheap and should include an additional $100m in cash. “The fact that Latitude is offering this much scrip doesn’t put us in much better a position than we are currently in,” Mr Leyland said.

At least one other significant shareholder also says it will not sell at the current price. “Momentum is quickly building as more and more Humm shareholders realise what a dud deal this is,” Mr Abercrombie said.

Humm shareholders will vote on the sale on June 23. To succeed, the deal needs the approval of more than 50 per cent of shareholder votes cast.

The combined Humm consumer finance and Latitude businesses would be the largest of their kind in Australia with gross receivables of $8.4bn, some five million customers and around 82,000 merchants.

The Humm buy now, pay later platform – which is to be sold to Latitude – was created in 2019 through the merger of two legacy platforms, Certegy EziPay and Oxipay. Humm will be renamed Flexi Capital Group and retain flexicommercial.

Shares last traded at 76c.