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£2bn merger called off

Rathbones pulls out of Smith & Williamson deal

Jim Pettigrew
Jim Pettigrew: sits on Rathbones’ board

A £2 billion merger of two wealth managers has been called off.

Rathbone Brothers had hoped to buy rival Smith & Williamson and create a  new force in the sector with £56 billion of assets under administration.

It confirmed the talks on 21 August that the two firms were in exclusive talks. The proposed merger valued Smith & Williamson at £600 million.

But tonight, Rathbones, which is listed on the London Stock Exchange, said the deal had been aborted and that it would take a £5m hit in costs.

In a statement after the market closed, it said: “Following very extensive due diligence and negotiations, we have been unable to conclude a transaction that is in the best interests of Rathbones’ shareholders.”

Chief executive Philip Howell added: ‘The combination was intended to accelerate Rathbones’ existing strategy, but ultimately we were unable to agree terms that offered our shareholders an appropriate balance of risk and reward.”

There was no explanation as to why talks had collapsed, though there was speculation that Rathbones was not prepared to meet privately-owned Smith & Williamson’s demands.

Jim Pettigrew, chairman of Scottish Financial Enterprise and of CYBG, parent company of Clydesdale Bank, sits on the Rathbones board.

There has been rumours that rival Tilney was attempting to gatecrash the merger.

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