Financial planning and investment firm Tilney is working with the Financial Conduct Authority (FCA) in a bid to get approval for its merger with professional services firm Smith & Williamson.
The deal was first announced in September 2019.
A joint statement from Smith & Williamson and Tilney said: “As part of the regulatory process to approve the transaction, the Financial Conduct Authority has raised a number of issues with the proposed transaction as currently structured.
“As a result, Tilney is engaging with the FCA to seek to address its concerns and understand what requirements need to be met for a new application that are consistent with the strategic rationale and investment case.
“Both parties continue to believe that a merger of Tilney and Smith & Williamson represents a significant opportunity to create the UK’s leading wealth management and professional services business and remain fully committed to the merger.”
Portfolio Adviser sister title International Adviser contacted the FCA for further information, but the watchdog declined to comment.
Canadian interest
News of the FCA’s issues with the M&A deal were first revealed by Toronto Stock Exchange-listed asset manager AGF Management.
The firm has a stake in Smith & Williamson.
AGF Management said in a statement to the TSE on 20 January: “The proposed transaction structure for the previously announced merger of Smith & Williamson and Tilney Group has not met with its approval.
“The combined management and boards of Smith & Williamson and Tilney Group remain committed to the merger.
“Discussions with the FCA are ongoing to determine the required steps forward.
“All parties remain fully committed to the merger and continue to believe very strongly in the underlying strategic rationale of bringing the respective businesses together.
“It is anticipated that the completion of the transaction, which remains subject to regulatory approval, may be delayed.”
AGF Management first entered the UK private client space with an initial investment in private client asset manager NCL (Securities) in 1998, and made a further investment into an enlarged company created by the merger of NCL and Smith & Williamson in 2002.
Terms of the deal
In September 2019, the firms said that Smith & Williamson shareholders will receive £625m ($820m, €740m) through a combination of cash and shares in the merged business.
The shareholders will be placing the majority of their investment into the equity of the enlarged group.
The transaction values the combined business at approximately £1.8bn.
Tilney Smith & Williamson will have revenue of around £500m and earnings before tax of £150m.
