Rathbones to buy Scottish wealth manager Speirs & Jeffrey

Rathbone Brothers has agreed to acquire Scotland's largest independent wealth manager, Speirs & Jeffrey, for an initial cash and shares consideration of £104m.

Rathbones Group

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The consideration comprises £79m in cash - which will be funded from internal cash resources and the proceeds of a proposed £60m equity placing - and the issue of 1m new Rathbone shares worth £25m.

Speirs & Jeffrey has operated as an independent investment management firm for over a century, with nearly three quarters of its clients having been with the company for more than 10 years. All of its current directors and investment managers will join Rathbones and the group's chief executive, Russell Crichton, will become the head of Rathbones' Scottish business.

Rathbones said the deal will enable it to establish a much stronger presence in Scotland, with Glasgow becoming the group's largest office after London following the transaction. It will also further enhance the company's position as one of the UK's largest wealth managers with pro-forma funds under management of £44.5bn.

This will allow the enlarged entity to capture further scale benefits from ongoing investment in technology and the management of regulatory change for the benefit of its clients, staff and shareholders.

Rathbones expects underlying earnings per share accretion of at least 8% from the acquisition, and a return on investment of around 13% in the third year following completion. In addition, it reckons the deal will be marginally EPS accretive on an underlying basis in the first full year after completion.

CEO Philip Howell said: "From the outset of our engagement, both teams have recognised how compatible they are in culture, investment philosophy and dedication to client service. Speirs & Jeffrey represents an ideal strategic, professional and geographic fit with Rathbones and we look forward to working together both to develop our business in Scotland and deliver compelling returns for our shareholders.

"Key to our combined future success will be the principle of putting clients at the forefront of what we do, and we will remain committed to this as we welcome Speirs & Jeffrey into the group."

The deal, which is subject to approval from the Financial Conduct Authority, is expected to close in the third quarter.