Mortgage Brain has pulled out of its merger with software rival TrigoldCrystal following the Office of Fair Trading’s decision to refer the deal to the Competition Commission.
The OFT was concerned the merger would result in less competition and innovation in the sector and referred the case to the CC. The CC was due to report back with its decision by September 1.
The merger, announced in December, could have been worth up to £9.9m.
Mortgage Brain chief executive Mark Lofthouse says the firm is not big enough to go through the referral process.
He says: “The acquisition of TrigoldCrystal would have brought massive benefits for the provision of technology to the intermediary mortgage market. However, we do not feel it is in the best interests of everyone to progress.”
John Charcol senior technical manager Ray Boulger says the length of time the CC is allowed to investigate the referral would have been a factor in informing the decision to pull away from the deal.
He says: “These investig- ations tend to delay the process by six months or so. With the current state of the mortgage market, it could mean the animal they are acquiring is rather different to the one they initially looked at. I suspect that is a key factor.”
Finance & Technology Research Centre director Ian McKenna says: “It is a good thing the deal was referred to the CC. It would be worrying to see a single-provider-owned sourcing system. Competition has to be a good thing.”