Rathbones deal for Speirs & Jeffrey could reach £250m

Rathbones’ deal to acquire Scotland’s second-largest wealth manager Speirs & Jeffrey could rise to £250m.


Rathbones will pay an initial cash amount of £79m with an additional £25m payable at completion through the issue of 1m new Rathbones shares, according to a trading update published this morning. These shares will be locked in to agreement for three years from completion.

However, Rathbones said further contingent consideration on earn-out payments of up to 5.8m Rathbones shares may also be payable. At a current price of £25.02 per share, this could bolster the transaction by £145m, resulting in a total price of £250m.

When news of the deal first broke in April, Rathbones and Permira were entering a £200m bidding war over the 112-year-old stockbroker.

The Rathbones board hopes to achieve cost synergies of approximately £6m per year within three years, mainly from the streamlining of operations and infrastructure, with a total of approximately £3m costs to achieve these synergies over three years following completion.

Its funds under management will increase by 18% to £44.5bn.

Philip Howell, CEO of Rathbones (pictured), said: “Speirs & Jeffrey represents an ideal strategic, professional and geographic fit with Rathbones and we look forward to working together both to develop our business in Scotland and deliver compelling returns for our shareholders.”

The deal, which is subject to approval by the FCA, is expected to complete in the third quarter of 2018.

The firm’s board said it expects underlying earnings per share (EPS) growth of at least 8% and a return on investment of approximately 13% in the third year following completion.

Glasgow presence

All of Speirs & Jeffrey’s current directors and investment managers will join Rathbones and Speirs & Jeffrey CEO Russell Crichton will become head of Rathbones’ Scottish business.

Rathbones’ Glasgow team will also combine with Speirs & Jeffrey.

Speirs & Jeffrey chairman Graham Waddell said: “The fact that our team will remain intact and that our clients will continue to receive the same exacting standards of personal service, whilst benefitting from the wider resources of Rathbones, fills me with great confidence for the future.”

Speirs & Jeffrey, which was founded in 1906, runs £5.5bn in assets and is wholly owned by the business’ working directors. The firm has only had 21 partners/directors, 10 of whom are in the business today.

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