Schroders has reached agreement on a recommended 135p-a-share offer for Cazenove Capital that values the investment business at 424m pounds.
The FTSE 100-listed asset management group, which confirmed rumours of a possible cash offer on Friday, said that the move reflects its strategy of "growing our Private Banking business and, in addition, it strengthens our position in UK Intermediary", the group said on Monday morning.
David Mayhew, the Chairman of Cazenove Capital, said that the board unanimously recommends the transaction, which "brings together two long-standing organisations with close cultural values". He said that the deal was a "strategic fit" and on "attractive financial terms".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
When including Cazenove's £17.2bn of assets under management (AuM), Schroders' pro-forma AuM would have stood at £22.92bn at December 31st 2012.
Schroders said that the acquisition will provide economies of scale, mainly in UK funds distribution and infrastructure, that will see £12-15m of pre-tax cost synergies ever year. It will be earnings enhancing after amortisation of intangible assets in the first full financial year.
"Cazenove Capital's culture of client focus and investment excellence are a strong fit with Schroders," said Schroders Chief Executive Michael Dobson.
"This transaction creates a leading, independent Private Banking and Wealth Management business in the UK, and brings additional investment talent in complementary strategies across UK and European equities, multi-manager and fixed income to Asset Management. I am confident the transaction will create long-term value and benefits for clients, shareholders and employees."
-
8 of the best houses for sale for around £500,000Some of the best houses for sale for around £500,000 – from a 19th-century stone farm cottage in North Yorkshire and a two-bedroom apartment in Edinburgh’s New Town to a converted Methodist chapel in Norfolk
-
What will the unravelling of US-China trade mean for the economy?What will a US-China decoupling mean for the global economy?
