Rathbones Brothers has agreed to acquire 100% of the issued share capital of Scottish investment manager Speirs & Jeffrey in a stock-cash deal worth £104m.
Speirs & Jeffrey has funds under management of £6.7bn as at 10 May 2018. The firm employs 38 investment professionals and has 8,500 clients.
The deal consideration includes a cash payment of £79m and issue of 1 million new Rathbones shares valued at £25m. The cash portion of the transaction will be funded by internal cash resources and the proceeds of a proposed £60m equity placing.
The transaction also includes further contingent consideration, earn-out payments and incentivisation awards of up to 5.8 million Rathbones shares “depending upon the achievement of synergies that deliver additional earnings accretion”.
The acquisition will boost Rathbones’ funds under management by 18% to £44.5bn.
Speirs & Jeffrey will consolidate with Rathbones’ Glasgow team. The acquired entity’s existing directors and investment managers will join Rathbones as part of the deal, while its CEO Russell Crichton will lead Rathbones’ Scottish arm.
Rathbones expects the deal to offer underlying EPS accretion of at least 8% and return on investment of around 13% in the third year post completion. It also expects the transaction to be marginally EPS accretive on an underlying basis in the first full year upon closing.
Rathbones 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.”
The deal is expected to close in the third quarter of this year, subject to regulatory nod.
Speirs & Jeffrey chairman Graham Waddell said: “The fact that our team will remain intact and that our clients will continue to receive the same exacting standards of personal service, whilst benefitting from the wider resources of Rathbones, fills me with great confidence for the future.”