Intrinsic, a subsidiary of Quilter, the UK wealth manager, is adding 400 advisors to its network via a deal expected to complete in the second quarter.

Intrinsic Financial Services, a subsidiary of UK-listed Quilter, has agreed to buy Lighthouse Group in cash for about £46.2 million ($60.9 million). The purchase adds about 400 advisors and is an example of continued merger and acquisition activity in the wealth management arena.

Under the transaction's terms, Lighthouse shareholders will recieve 33 pence for each of their shares. The deal equates to a premium of about 24.5 per cent to Lighthouse's closing price of 26.5 pence per share on 2 April 2019.

Additionally, Lighthouse shareholders are entitled to be pay a dividend for 2018 of up to 0.5 pence for each share, as announced on 26 February, the firms said in a statement yesterday.

The agreement melds AIM-quoted Lighthouse with Intrinsic, with the latter having a network of more than 3,500 advisors, including independent financial advisors, as well as restricted financial advisors, serving about 200,000 clients, making it one of the UK's largest advice groups.

Recent years have seen M&A deals in the advisory space such as through the Tilney-Bestinvest transaction in 2014 and Schroders' purchase of Cazenove Capital in 2013. The Standard Life/Aberdeen Asset Management merger, creating Standard Life Aberdeen in 2017, was arguably the largest transaction of its kind in recent years. Following the Retail Distribution Review reforms of 2013, and a continued rise in regulatory costs, there is a demand for economies of scale.

Lighthouse's roster of 400 advisors operate through a number of divisions: a national affinity business, advising members of affinity groups, with 23 contractual relationships whose aggregate membership exceeds six million individuals; a wealth advisory business, working with clients of approximately 40 accountancy and professional connections and higher net worth customers across the South of England; and appointed representatives servicing customers in their local communities.

Quilter said the Lighthouse directors intend to unamimously recommend that shareholders back the deal.

As well as shareholder approval, the transaction is subject to clearance by the Financial Conduct Authority, and Quilter said it expects the process to be completed in the second quarter of this year.