Mark Loosmore of AT8 Group also asserts in a blog for Mortgage Solutions, both firms knew in advance that the deal would be terminated if the Office of Fair Trading (OFT) transferred it to the Competition Commission.
Loosmore said that the process with the Competition Commission, which would have taken around 5 months and cost as much as £1m, could not work for small businesses and that both firms knew the merger deal would fail if referred on by the OFT.
“There was always the chance that the bid would be referred to the Competition Commission and the consequences of this were always understood,” he explained.
Both Mortgage Brain and TrigldCrystal refused to comment further.
However, TrigoldCrystal confirmed yesterday that the OFT’s referral decision had “triggered the termination” of the merger with Mortgage Brain.
It also announced profits (EBITDA) were £1.2m in 2010 and said Q1 2011 has been one of our best quarters ever.
“Recurring revenues are running at 90% and net debt is expected to be satisfied completely in Q2 (down from a peak of £6m in 2004).”
After announcing the decision to call off the proposed acquisition with TrigoldCrystal, Mark Lofthouse, chief executive of Mortgage Brain said: “We don’t feel it is in the best interests of everyone involved to progress.
“Referral cases like these are designed for large companies and we feel our time and resources will be better served continuing to invest in delivering the best products and services to intermediaries.”
In the latest Mortgage Solutions poll, over 70% of brokers said that the Office of Fair Trading (OFT) had got it right to refer the merger.
A further 23% of brokers disagreed with the decision while 5% remained undecided.
Andy Pratt, chief operating officer at brokerage Alexander Hall, said that both firms worked better as separate entities.
He said: “Both have different strengths and are very comparable in terms of the service that is offered to brokers.
“I think that both firms benefit from competing with one each another in the market place by investing in good products for brokers.
“The termination of the deal has ensured that the competition continues in the market,” he said.