AFH said its offer recognised Lighthouse's "limited growth prospects under its current strategy" and acknowledged that approximately 50% of its cash was required to be retained for regulatory purposes.
AFH added that it was "disappointed" by the reaction of the Lighthouse directors not to engage in discussions and is "surprised by subsequent statements that indicated that Lighthouse did not seek to consult its shareholders before rejecting AFH's approach".
However Lighthouse said the offer "fundamentally undervalues" the group and its prospects.
In a statement, AFH said:
"The Board of AFH believed that a potential enlarged group would have brought efficiencies and cost synergies. In addition they believed that access to AFH's proven model would have generated additional revenue and margin for the combined businesses. Given the lack of willingness by Lighthouse to engage, together with the share price movement which has prevented further confidential discussions, the Company cannot carry out what it considers to be the appropriate level of due diligence within the time period imposed."
AFH CEO Alan Hudson added:
"We are naturally disappointed with the reaction of Lighthouse to our indicative proposal which included a mix and match structure for individual Lighthouse shareholders. AFH, with its extensive track record of M&A to date, continues to progress its stated organic and acquisitive growth strategy and looks forward to updating the market in due course."
