NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
14 June 2018
Rathbone Brothers Plc
Acquisition of Speirs & Jeffrey Limited
The board of Rathbone Brothers Plc ("Rathbones") today announces that it is to acquire 100% of the issued share capital of Speirs & Jeffrey Limited ("Speirs & Jeffrey"), Scotland's largest independent wealth manager with funds under management of £6.7bn and 38 investment professionals, from the shareholders of Speirs & Jeffrey, all of whom are working executive directors of the business.
Speirs & Jeffrey has operated as an independent investment management firm for over a century and has established many long term client relationships, with nearly three quarters of clients having been with the company for over 10 years. All of Speirs & Jeffrey's current directors and investment managers will be joining Rathbones and Speirs & Jeffrey CEO Russell Crichton will become the Head of Rathbones' Scottish business. Rathbones' Glasgow team will combine with Speirs & Jeffrey to consolidate Rathbones' existing Glasgow presence.
Speirs & Jeffrey shares a strong cultural alignment with Rathbones, particularly in relation to its investment process and proposition. Speirs & Jeffrey's c.8,500 clients will benefit from access to Rathbones' broader product and service offering including lending, financial planning and dedicated specialist offerings such as Rathbones' charities team and ethical investment capability. Speirs & Jeffrey's clients will see continuity of their investment manager and will benefit from the support of and access to Rathbones' deeper research resources, front office investment systems, wider platform and the provision of an enhanced investment process.
Rathbones is a leading consolidator within the wealth management industry, with a long track-record of successful acquisitions of culturally aligned businesses with a shared focus on their clients and people. In line with its stated strategy, Rathbones has been growing its core private client discretionary investment management business both organically and by acquisition. The acquisition of Speirs & Jeffrey will enable Rathbones to establish a much stronger presence in Scotland, with Glasgow becoming the Group's largest office after London following the transaction. The transaction will also further enhance Rathbones' position as one of the UK's largest wealth managers with pro-forma funds under management of £44.5bn. This will allow the enlarged entity to capture further scale benefits from ongoing investment in technology and the management of regulatory change for the benefit of its clients, staff and shareholders.
Under the terms of the transaction, Rathbones will pay an initial cash and share consideration of £104m. Further contingent consideration of 0.6m Rathbones shares will be payable dependent upon meeting certain administrative and procedural targets that enable the delivery of cost synergies. Earn-out consideration and incentivisation awards of up to a maximum of a further 5.2m shares will only be payable as operational and financial performance targets are delivered over the medium term.
The Board of Rathbones expects:
Philip Howell, CEO of Rathbones said:
"From the outset of our engagement, both teams have recognised how compatible they are in culture, investment philosophy and dedication to client service. 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. Key to our combined future success will be the principle of putting clients at the forefront of what we do, and we will remain committed to this as we welcome Speirs & Jeffrey into the Group."
Russell Crichton, CEO of Speirs & Jeffrey, said:
"My colleagues and I have long admired Rathbones, and everything we experienced during our discussions has merely strengthened our conviction that it offers the very best fit for our clients and our people. With our client-facing staff members committed to and enthusiastic about the future, clients will continue to enjoy the high level of personal service which has become the hallmark of our firm, but with the additional significant benefits of Rathbones' scale, specialist expertise and deeper capabilities. We are all excited about our partnership with Rathbones and the opportunities this new chapter in our history will provide." Graham Waddell, Chairman, added: "This represents a significant milestone for S&J but undoubtedly the right one for our clients and our people. 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."
The acquisition is subject to approval by the FCA and is expected to complete in the third quarter of 2018.
Key financial metrics relating to Speirs & Jeffrey5
| Year to 10 May 2017 |
(Audited statutory accounts)
| Year to 10 May 2018 |
(Unaudited management accounts)
|Underlying profit before tax||£9.1m||£10.6m|
|Underlying profit before tax margin||36%||38%|
|Profit after tax (reported)||£7.2m||£8.2m|
|Execution only/other FUM||£0.6bn||£0.7bn|
Detail on the total maximum amounts payable in relation to the transaction
Conference call and investor presentation details
An analyst and investor conference call will be held at 8:00 a.m. today.
International: +44 (0) 1452 555566
Participants should quote the conference code '1778968' to join the call.
Participants will be able to access the presentation slides from 7:00 a.m. today by going to the Investor Relations section of Rathbones' website using the following link:
The information contained in this announcement is inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon publication of this announcement, this inside information is now considered to be in the public domain. The person responsible for arranging this announcement on behalf of Rathbones is Ali Johnson, Company Secretary.
| Rathbone Brothers Plc |
Philip Howell, Chief Executive
Paul Stockton, Finance Director / Designate Managing Director, RIM
Shelly Patel, Head of Investor Relations
|+44 (0) 20 7399 0000|
| RBC Capital Markets (Financial Adviser and Joint Corporate Broker to Rathbones) |
Oliver Asplin Hearsey
|+44 (0) 20 7653 4000|
| Peel Hunt (Joint Corporate Broker to Rathbones) |
|+44 (0) 20 7418 8900|
| Camarco (Communications Adviser to Rathbones) |
|+44 (0) 20 3757 4984|
| Spencer House Partners LLP (Financial Adviser to Speirs & Jeffrey) |
|+44 (0) 20 7647 8567|
RBC Europe Limited is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority (the "FCA") and the Prudential Regulation Authority, is acting for the Company in connection with the Acquisition and no-one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of RBC Europe Limited nor for providing advice in relation to the Acquisition or any other matter referred to in this Announcement.
Peel Hunt LLP, which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company in connection with the Acquisition and no-one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Peel Hunt LLP nor for providing advice in relation to the Acquisition or any other matter referred to in this Announcement.
This Announcement is for information purposes only and shall not constitute an offer to sell or issue or the solicitation of an offer to buy, subscribe for or otherwise acquire securities in any jurisdiction in which any such offer or solicitation would be unlawful. Any failure to comply with this restriction may constitute a violation of the securities laws of such jurisdictions.
This Announcement may contain "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company's profitability and ability to access capital and credit, a decline in the Company's credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.
 As at 10 May 2018
 Based on Rathbones FUM as at 5 April 2018 and Speirs & Jeffrey FUM as at 10 May 2018; includes execution only
 If the conditions for the contingent consideration are not achieved by 31st December 2019, the maximum number of shares under the earn-out and incentivisation awards will increase by 0.6m Rathbones shares
 Based on 2021 consensus expectations, derived from applying consensus 2019-2020 growth rate to 2020 market forecasts
 2018 figures are based on latest unaudited financial information per management accounts. 2017 figures are based on audited financial information. Underlying profit before tax for the year ended 10 May 2018 is stated before deduction of office fit-out costs of £0.1m and deal related costs of £0.3m. Underlying profit before tax for the year ended 10 May 2017 is stated before deduction of non-recurring professional services costs of £0.1m
 The number of shares is calculated based on the average share price over the ten day period prior to 14 June 2018
 The number of shares is fixed and illustrative value is calculated based on average share price over the ten day period prior to 14 June 2018
 The number of shares is capped at 5.2m shares. If the conditions for the contingent consideration are not achieved by 31st December 2019, the maximum number of shares under the earn-out and incentivisation awards will increase by 0.6m Rathbones shares
 Illustrative value is calculated based on average share price over the ten day period prior to 14 June 2018