Wealth manager Rathbone Brothers PLC (LON:RAT) has announced that it is in exclusive talks with UK-based financial services provider Smith & Williamson over a possible £2bn all-share merger.
M&A activity has recently stepped up in the asset management sector, including the mega-merger of Standard Life Aberdeen PLC (LON:SL.) which completed last week.
READ: Standard Life Aberdeen edges higher on first day of trading after £11bn merger completes
In a statement confirming weekend press reports, the FTSE 250-listed firm sad: "Whilst these discussions have been underway for some time and the boards of both Rathbones and Smith & Williamson are confident that the combination would bring meaningful benefits for the stakeholders of both businesses, discussions are ongoing and there can be no certainty any transaction will be agreed.
"However, if agreed, any such transaction will be subject to the approval of shareholders."
Rathbone said a further announcement would be "made as and when appropriate".
Sky News had reported that the merger would be structured as a takeover by Rathbone – which has a £1.4bn market value - of independently-owned Smith and Williamson.
The deal, which would bring together two firms employing about 3,000 people, would see Smith and Williamson hand shares in the combined group to its employees who own the majority of the company, Sky said.
Deal makes sense strategically
In a note to clients, analysts at Liberum Capital said: “ We consider this to be a realistic range. Strategically, the deal makes sense in our opinion, particularly given Rathbones has been struggling to drive organic growth much beyond 3% of opening FUM in recent years.”
Liberum placed its ‘hold’ rating and 2,261p price target ‘under review’.
In late afternoon trading, Rathbone shares had slipped 0.3%, or 8p lower to 2,762p.
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