Rathbones walks away from Smith & Williamson deal talks
Rathbone Brothers has terminated discussions to acquire wealth management rival Smith & Williamson, the FTSE 250 announced overnight.
Financial Services
15,999.21
17:14 04/10/24
FTSE 250
20,900.08
17:14 04/10/24
FTSE 350
4,570.17
17:14 04/10/24
FTSE All-Share
4,527.24
16:54 04/10/24
Rathbones Group
1,792.00p
16:40 04/10/24
The pair had confirmed last Monday that they had been engaged in exclusive talks for some time but after carrying out "very extensive due diligence and negotiations", they were unable to agree a deal that was felt to be in the best interests of shareholders.
It was reported earlier this week that private equity-backed peer Tilney Group had made a rival all-cash bid.
"We continue to believe that our proposition was both a compelling strategic and value creation opportunity for all Smith & Williamson's stakeholders," said chief executive Philip Howell.
"The potential combination was intended to accelerate Rathbones' existing strategy, but ultimately we were unable to agree terms that offered our shareholders an appropriate balance of risk and reward. Rathbones remains confident in its strategy and will continue to look for growth opportunities in the sector and assess them with discipline."
Rathbones has incurred a non-underlying charge of approximately £5m in 2017 for expenses associated with the prospective transaction, of which £1.8m was reported within other expenses in the recent statement for the six months ended 30 June.
Following media reports, the original talks had been confirmed by the company in an announcement to the market on 21st August.
"The wording of the statement implies that the talks stalled over price," said analyst Paul McGinnis at Shore Capital, pointing to the comments about the appropriate balance of risk and reward and speculating whether the Tilney bid might have been a factor in S&W’s assessment of Rathbones’ offer.
"We applaud the discipline shown by Rathbones’ management in being willing to walk away from a deal where they felt it would be difficult to add value to shareholders," he added, saying the exceptional charges equated to only 10p/share, "small relative to any value destruction from overpaying on a potential £600m deal".