The acquisition is subject to approval by the FCA and is expected to complete in the third quarter of 2018.

UK wealth manager Rathbone Brothers has agreed to acquire 100 per cent of the issued share capital of Speirs & Jeffrey, a Scottish independent wealth manager with £6.7 billion ($9 million) in assets under management and 38 investment professionals.

All of Speirs & Jeffrey's current directors and investment managers will be joining Rathbone. Speirs & Jeffrey chief executive Russell Crichton will become the head of Rathbone's Scottish business, the firms said in a London Stock Exchange statement. Rathbone's Glasgow team will combine with Speirs & Jeffrey to consolidate Rathbone's existing Glasgow presence.

Speirs & Jeffrey's clients will benefit from access to Rathbone's product and service offering, including lending, financial planning and dedicated specialist offerings such as Rathbone's charities team, and ethical investment capability. 

Rathbone will drop the Spiers & Jeffrey name, but the business will continue to trade under the 112-year old brand for a 12-month merger period before rebranding as its new parent company.

Under the terms of the transaction, Rathbone will pay an initial cash and share consideration of £104 million. Further contingent consideration of 0.6 million of Rathbone's 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 5.2 million shares will only be payable as operational and financial performance targets are delivered over the medium term.

Rathbone Brothers expects the following from the deal:
• Underlying earnings per share (EPS) accretion of at least eight per cent and return on investment of approximately 13 per cent in the third year following completion;
• The transaction to be marginally EPS accretive on an underlying basis in the first full year following the acquisition;
• To achieve run-rate cost synergies of approximately £6 million per annum within three years, principally from the streamlining of operations and infrastructure, with a total of approximately £3 million costs to achieve these synergies over three years following completion.

"From the outset of our engagement, both teams have recognised how compatible they are in culture, investment philosophy and dedication to client service,” said Philip Howell, chief executive of Rathbone. “Speirs & Jeffrey represents an ideal strategic, professional and geographic fit with Rathbone's, 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."

The acquisition is subject to approval by the FCA and is expected to complete in the third quarter of 2018.

The deal comes 10 months after Rathbone had confirmed that its merger talks with Smith & Williamson had been terminated.

Placing
Rathbone Brothers has also announced that it will conduct a placing of new ordinary shares in the capital of the company. 

It will represent approximately five per cent of its existing issued ordinary share capital to institutional investors at a placing price of 2,500p per placing share to raise approximately £60 million.

The placing will be conducted through an accelerated bookbuild process. Peel Hunt and RBC Europe Limited are acting as joint bookrunners in connection with the placing.

The net proceeds of the placing are intended to fund part of the initial cash consideration payable at completion of the acquisition and be used for general corporate purposes.

The bookbuild opened with immediate effect from the announcement of the placing. The final number of placing shares, the timing of the closing of the Bookbuild and allocations are at the discretion of Peel Hunt and RBC.

The placing shares, when issued, will be fully paid and will rank side by side in all respects with the existing ordinary shares of the company, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.

The placing is also subject to the conditions and termination rights set out in the placing agreement between the company, Peel Hunt and RBC. 

It does not require any further shareholder approval. Applications will be made for the placing shares to be admitted to the premium listing segment of the Official List of the FCA and to be admitted to trading on the main market for listed securities of the LSE.

It is expected that settlement for the placing shares and admission will take place on or before 8.00 am on 18 June.