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Royal Bank of Canada on Thursday said it has agreed to buy London-listed investment advice company Brewin Dolphin Holdings PLC for £1.6 billion.
The buyout is an ‘exciting strategic opportunity’ for RBC, allowing the Toronto-based lender a chance to combine its UK and Channel Islands wealth management arm with the FTSE 250 constituent.
RBC will pay 515 pence per Brewin Dolphin share, a 62% premium to its 318p closing price on Wednesday. Brewin Dolphin shares closed down 1.4% on Wednesday.
They jumped 60% to 509.00p each in London in early trade on Thursday, giving it the FTSE 250 company a market capitalisation of £1.55 billion.
The RBC offer values Brewin's equity at £1.6 billion. RBC noted this represents 2.8% of Brewin Dolphin's £55.0 billion in assets under management as of February 28.
The tie-up of Brewin with RBC's existing UK wealth management offering will create a ‘market leader’ with £64 billion assets under management, on a pro-forma basis, as well as combined annual revenue of £545 million.
RBC said: ‘RBC highly values Brewin Dolphin's position as a market leading advice focussed wealth manager in the UK and Ireland with a longstanding record of delivering superior client service. RBC is also attracted to Brewin Dolphin's position within the broader UK wealth sector as one of the foremost asset gatherers in a secular growth and consolidating market and its robust investment performance.’
‘The Brewin Dolphin directors, who have been so advised by Barclays and Lazard as to the financial terms of the acquisition, consider the terms of the acquisition to be fair and reasonable,’ Brewin Dolphin said.
In Toronto on Wednesday, RBC shares had ended down 0.4% at C$139.88.
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