Rathbone Brothers terminates merger talks with Smith & Williamson


An effort to merge with Smith & Williamson (S&W), its rival wealth manager, has been dropped by Rathbone Brothers after failing to agree on a deal that would have been “in the best interests” of its shareholders.

On Thursday, the FTSE 250 company announced that it had conducted “very extensive due diligence and negotiations” but had ceased exclusive talks between the two British firms.

The failure of the discussions potentially opens the way for competitor Tilney to recover an unsuccessful counter bid that was reported earlier this week by Reuters.

Tilney began its approach after Rathbones confirmed earlier this month that it was conducting negotiations concerning an all-share merger with Smith  & Williamson, which controlled by current and former employees and by AGF, a Canadian investment firm.

“We continue to believe that our proposition was both a compelling strategic and value creation opportunity for all Smith & Williamson’s stakeholders,” Rathbones’ boss Philip Howell said in a statement.

“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.”

It was stated by the wealth manager that in 2017, that the value of working on the missed deal would see it take a price of about 5 million pounds ($6.5 million).

The proposal Rathbones assessed S&W at between 500 million pounds and 600 million pounds; a source told Reuters earlier this week.

Shares of Rathbones closed down 0.5 percent at 27.80 pounds on Thursday, giving about 1.4 billion pounds in market capitalisation.

On Tuesday, two other sources informed Reuters that the wealth manager managed by Permira, a private equity house, Tilney, had failed in an attempt to open discussions with S&W.

At the time, the sources said that Tilney would consider making a new bid in the event the Rathbones discussions collapsed.

S&W and Tilney did not respond to any requests for comment.