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Rathbones bid collapses as Smith & Williamson goes for IPO

Rathbones bid collapses as Smith & Williamson goes for IPO

(Update) Rathbones' proposed merger with Smith & Williamson (S&W) has been aborted, with the latter favouring a stock market listing. 

Rathbones announced its interest in S&W on 21 August, with Tilney rumoured to be waiting on the sidelines ready to hijack the bid. 

In an announcement posted around two hours after markets closed on 31 August, Rathbones said following 'very extensive due diligence and negotiations', it felt the deal would not be in the best interest of shareholders to pursue the deal. 

This was complemented by a later announcement from S&W shedding further light on the matter, revealing that Rathbones had approached the firm while it was drawing up its own plans for a potential initial public offering. 

'Further to the recent announcement made to the stock exchange by Rathbones, we can confirm that merger discussions have ended,' the S&W statement read. 

'Following our growth and business development in recent years, the Board had agreed to prepare the company for a potential stock market listing. While we were pursuing this course, we were approached by Rathbones.

'After careful consideration, we have been unable to reach agreement on terms which would be in the best interests of all our stakeholders.'

Rathbones revealed it had incurred a non-underlying charge of approximately £5 million in 2017 for expenses associated with the prospective transaction, of which £1.8 million was reported within 'other expenses' in its interim results covering the six months to 30 June. 

'We continue to believe that our proposition was both a compelling strategic and value creation opportunity for all Smith & Williamson's stakeholders,' Rathbones chief executive Philip Howell (pictured) told the market.

'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.'

In its latest set of results S&W registered a 17.5% in assets under management to £18.8 billion, while operating income jumped 9.9% to £244.6 million. 

'As part of our preparation for a potential listing we have developed a strategy to deliver growth across all our business lines and further enhance our position as a leading adviser to private clients and their business interests,' S&W said. 

'This will be achieved by continued investments in talent, infrastructure, client experience and a number of new initiatives to strategically engage with existing and new client groups, creating value for shareholders as our business grows.'

It is believed a number of S&W shareholders had reservations about a tie up with Rathbones, which would have created a combined entity valued at around the £2 billion mark with £55 billion worth of assets under management.

Canada's AGF, which owns 33% of S&W, has been looking for an exit for some time. The firm pulled its plans to float the business in summer 2007 as the financial crisis took hold.

'AGF will actively pursue alternatives to realize value in its investment in Smith & Williamson for the benefit of AGF shareholders,' said AGF chair and chief executive Blake Goldring in reaction to the failed merger. 

'This process reaffirms our position that there is a substantial amount of value in Smith & Williamson as a leading UK based private client investment management, financial advisory and accounting group.' 



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