Canadian challenger Mogo merges with Difference Capital
Mogo Finance Technology, the Canadian challenger bank, has signed a definitive arrangement to merge the bank with Difference Capital Financial.
Under the terms of the agreement, each common share of Mogo will be exchanged for one Difference common share. Upon completion of the transaction, former Mogo shareholders will own approximately 80% of the combined entity on a fully diluted basis.
The transaction is subject to Mogo shareholder approval, regulatory approval and satisfaction of other customary conditions. The transaction is expected to close in the second quarter of 2019.
The combined entity will go under the name Mogo. Mogo’s founder and CEO Dave Feller will be chairman and CEO; and Greg Feller will be president, CFO and director.
“This transaction enables Mogo to continue to invest in new products and innovation, building on our position in the Canadian fintech space,” said David Feller.
“The merger with Difference strengthens our financial position and represents a significant opportunity to create value for shareholders of the combined entity,” adds Greg Feller. “Shareholders of both companies will benefit from improved financial flexibility as we execute on our strategy of partnering to bring best-in-class products to our more than 800,000 members.”
The new company will keep building on Mogo’s fintech platform in Canada. The combination will give Mogo immediate access to approximately $9 – $10 million in cash, which reflects proceeds from Difference’s two recent funding rounds.
In addition, Mogo will have control of Difference’s portfolio of investments in private technology companies in Canada, including Hootsuite and Vision Critical, which collectively have an estimated fair market value of approximately $24 million.