Schroders confirmed on Friday that it was in talks to buy Cazenove Capital Holdings.
The British multinational asset management company released a statement saying it was considering a cash offer for Cazenove, which manages £18.7bn in assets.
The firm has until April 19th to decide.
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Schroders' assets under management would rise 10% following an acquisition.
The news comes a week after the Schroders high-profile head of UK equities, Richard Buxton, resigned.
"Schroders certainly needs to do something given the loss of Richard Buxton and other fund managers. Clearly they will need a high quality UK franchise," Numis analyst David McCann told Reuters.
Cazenove, established in 1823, is one of the top stockbrokers with Queen Elizabeth II reportedly among its clients.
The fund management arm broke away after JP Morgan formed a joint venture with Cazenove's UK investment banking business in 2005.
Schroders may have to rally up between £500m and £600m for the deal considering Cazenove's most comparative rival is valued around 3.0% of its assets under management, McCann said.
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